BENGALURU : Amid a year of turbulence for leading domestic IT service providers, smaller niche markets are emerging as promising avenues for sustained growth. However, while India’s top five IT companies are expected to benefit from it, midcaps and smaller exporters may face challenges as larger peers target their key markets.
A Mint analysis, spanning four quarters of 2023, revealed that Tata Consultancy Services, Infosys, Wipro and Tech Mahindra witnessed robust growth across manufacturing, health and life sciences, and energy and retail. The sectors outpaced the companies' overall net revenue growth, which is expected in a challenging year marked by a decline in business from primary revenue source—banking, financial services, and insurance (BFSI).
However, HCL Technologies, the other firm in the top five, was an outlier, with its BFSI revenue outpacing overall growth. Industry veterans said this indicated increasing tech maturity in these verticals leading to more tech transformation deals, compared to the saturated BFSI sector, which is already an advanced market.
However, this isn't good news for midcaps, such as Cyient, Persistent Systems, and Zensar, which might face heightened competition from larger firms, despite having developed specialized competencies in these sectors. According to Mint's analysis, manufacturing witnessed the fastest growth for Infosys and Tech Mahindra at 12.1% and 8.7% year-on-year, respectively.
In comparison, Infosys' quarterly revenue in December remained largely flat, while Tech Mahindra saw a 5.7% yoy drop. TCS, India's largest IT services firm by market cap, witnessed its energy, utilities, and resources vertical emerge as the fastest-growing, with key businesses growing at 12.8%
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