IT companies’ telecom business revenue may stay under pressure through 2024
Analysts suggest that the segment is likely to remain under pressure through mid 2024. Data from Jefferies shows a cumulative 4.6% dip in sequential revenue from the vertical across IT majors, the highest vertical-wise dip compared to all other segments, while revenue from Banking, financial services, insurance (BFSI), which is the largest revenue contributor for the Indian IT industry — saw revenue declining by a lesser percentage — 0.8% during the same period.
Indian IT majors Tata Consultancy Services (TCS), Infosys, HCLTech, Wipro and TechMahindra as a result have called out cuts in discretionary spends by communication sector clients. Research firm ISG said recently that the annualised contract value (ACV) of the telecom sector was down 20% year on year as telecom companies focus on cost optimisation, corporate restructuring and headcount reduction.
“The issue is about cautious spending and cost optimisation despite trends in 5G network automation and modernisation investments. The scale of corporate restructuring in the industry has impacted decision making,” said Mrinal Rai, principal analyst at ISG.
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