The Indian IT sector companies have posted record profits in the third quarter of the ongoing financial year amid the fall in the expenditure and growth in revenue. In the last three quarters, most of the Information Technology companies offered Work from Home (WFH) facilities due to Coronavirus induced lockdown, and this resulted in massive savings on office-related expenditure, which includes rent, electricity, maintenance and so on.
Moreover, the revenue of IT companies grew exponentially in the last few months due to increased expenditure by the companies on digital technologies to keep the operations going amid the lockdown. The net profit posted by the four largest Indian IT players- TCS, Infosys, Wipro, and HCL- touched 20,000 crore rupees for the first time.
“The technology sector is in the midst of a massive digitization wave, with more global enterprises embracing digital transformation to address the disruption of these unprecedented times,” HCL Chairman and Chief Strategy Officer Shiv Nadar said in a statement.
Most IT companies, including Shiv Nadar-led HCL, posed 30-40 per cent growth in profits in the third quarter of the year, which is a new record. “Technology has been a key enabler during the pandemic, and as we stand at the cusp of the next phase of technological innovation, it is vital that we draw inspiration from each other’s strengths and offer back our own to create a positive impact,” said Nadar.
The revenue and the profits of the IT sector are expected to grow further in the coming years as they have bagged multi-million dollar deals in the last few months. The Indian IT companies also acquired many small European firms and in many cases acquired the IT division of the company along with employees.
The European companies, which have traditionally been reluctant to outsource the IT operations like American firms, were forced to do so to cut the losses during the pandemic and this was a big win for the Indian IT sector.
Read More: Indian stock market adds $1.3 trillion in just nine months, thanks to the reforms
TCS, the market leader of the IT sector, crossed market valuation of 12 lakh crore rupees, thanks to its aggressive stance in the European market and strong balance sheet. “We are entering the New Year on an optimistic note, [with] our market position stronger than ever before, and our confidence reinforced by the continued strength in our order book and deal pipeline,” said TCS Chief Executive and Managing Director Rajesh Gopinathan.
Infosys, which was revived by Salil Parekh after the damaging tenure of Vishal Sikka, is leading the Indian IT sector in digital technologies. Traditionally Indian IT sector’s revenue from the digital sector has been low but in the last few years, the companies have tried to make the most out of the growing digital connectivity. Around half of Infosys’s total revenue comes from the digital sector, thanks to transformation led by Salil Parekh.
“The scale of new client partnerships with leading global companies such as Vanguard, Daimler and Rolls-Royce demonstrates the depth of digital and cloud capabilities of Infosys,” said CEO and MD Salil Parekh.
Almost two decades ago, the Indian IT sector rose to the occasion to solve what was known as the Year 2000 problem or Y2K problem and now post-Corona, the Indian IT companies are becoming saviour for the European and American companies in the digital age through sophisticated digital technologies.
With an annual output of more than 200 billion dollars, the Indian IT sector proves to be the backbone of the Indian economy and the primary source of foreign currency. It contributes around 7-8 per cent of India’s GDP and employs lakhs of people in the highly skilled services sector. In the coming years, the sector is set to grow exponentially given the rising expenditure on Information of Communication technology services by the companies as well as individuals and will play an important role in making India an economic powerhouse.