Indian IT giants optimistic about improved margins
BENGALURU, INDIA — Indian IT giants Tata Consultancy Services (TCS), Infosys, HCLTech, and Wipro are projecting a positive outlook for their financial performance in the upcoming quarters of FY25.
These companies anticipate that revenue growth will enhance their operating margins, supported by a stable pricing environment and strategic cost management.
The top four IT firms have successfully maintained their operating margin profiles in the first quarter of FY25, and they expect further improvements as the year progresses.
TCS and Infosys: Strategic pricing and cost optimization
TCS reported that the pricing environment remains stable, with no significant changes in recent quarters. The company’s CFO, Samir Seksaria, noted, “The good thing for us is the biggest headwind, which we have in terms of wage inflation.”
TCS is focusing on productivity and utilization to drive margin improvements, despite a slight dip in operating margin to 24.7% in Q1 due to wage hikes.
Meanwhile, Infosys is leveraging dynamic pricing models and cost optimization strategies to achieve its guided operating margin range of 20-22% for FY25.
CFO Jayesh Sanghrajka highlighted the company’s approach: “Value-based selling has led to improvement in realization. So, that’s one lever we do have to improve margin.” Infosys saw a 100 basis point improvement in its operating margin, reaching 21.1% in Q1.
HCLTech and Wipro: Navigating wage decisions and acquisitions
HCLTech is optimistic about margin improvements in the coming quarters, particularly in its engineering services segment. However, the company is still considering the timing of potential wage hikes, which could impact margins.
CFO Prateek Aggarwal stated, “There is a certain quarter-wise trajectory that we have had. If you look at the last couple of years, our Q1 is typically soft on the top line, which kind of translates to the bottom line EBIT as well.”
Wipro, on the other hand, expects margin enhancements through revenue acceleration and the onboarding of freshers. The company is also focusing on synergies from recent acquisitions to streamline operations and reduce delivery costs.
Outlook for FY25
The Indian IT majors are collectively optimistic about achieving their financial targets for FY25, driven by strategic initiatives and a favorable market environment.
As these companies continue to navigate challenges such as wage inflation and global economic uncertainties, their focus remains on leveraging revenue growth and operational efficiencies to enhance profitability.
With a renewed focus on recruiting fresh graduates and strategic pricing, the Indian IT sector is poised for a promising year ahead.
