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IT companies' share of digital rose to 57% of total revenues: Nasscom

IT firms' revenues during Q2 grew 4.5% sequentially and 17.8% year-on-year, with digital and cloud major drivers. (Photo: Bloomberg)Premium
IT firms' revenues during Q2 grew 4.5% sequentially and 17.8% year-on-year, with digital and cloud major drivers. (Photo: Bloomberg)

  • Net margins continued to decline sequentially primarily driven by salary hikes, new hires, increased sub-contracting costs as well as travel and facility costs. In Q2, margins declined year-on-year as talent availability continues to put pressure on hiring, retaining and sub-contracting costs

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BENGALURU: The share of digital revenues of select Indian IT services companies rose to 56.6% of total revenues during the September quarter, according to a Nasscom report titled Quarterly Industry Review Q2FY22. The report analyses results of a select set of leading Indian public technology services companies that represent a significant share of industry revenues.

Revenues during the quarter grew 4.5% sequentially and 17.8% year-on-year, with digital and cloud remaining major drivers, the report said.

In terms of geographic markets, IT companies saw sustained growth in revenues across major markets, both sequentially as well as on annual basis. Revenues from India bounced back during July-September, growing 8.1% quarter-on-quarter.

Vertical wise, all sectors continued to witness growth sequentially as well as on an annual basis. Manufacturing led in terms of sequential growth, while banking, financial services & insurance (BFSI) maintained lead on annual growth, with travel & hospitality showing a strong rebound.

Net margins continued to decline sequentially primarily driven by salary hikes, new hires, increased sub-contracting costs as well as travel and facility costs. In the second quarter, margins declined year-on-year as talent availability continues to put pressure on hiring, retaining and sub-contracting costs.

Net client addition maintained a positive trend with most companies witnessing new additions during the quarter. Revenue per client continued to increase on a sequential basis supported by high growth in revenues.

Employee count increased 5.3% on a quarterly basis and was up 17.5% annually as hiring remained the key strategy to counter talent availability. Also, as demand environment remains healthy, companies plan to hire more in the next few months of 2021.

Attrition remained high, reaching 19.3% this quarter, up from 17.5% last quarter. “This increase continues to be driven by the rising demand for new-age digital skills across industries. Companies continue to counter this trend through increased fresher hiring and focusing on reskilling and upskilling their current workforce," the report said.

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