Indian IT majors TCS, Infosys and Wipro posted an encouraging set of Q3FY22 numbers Wednesday on the back of a robust demand environment and an unabated thrust on digitalisation by businesses driving rapid adoption of the cloud. The three companies recorded combined consolidated revenues of ₹1,01,065.6 crore during the October-December quarter, which translates into a 21% year-on-year growth over Q3FY21. Combined net profits stood at ₹18,547 crore during the quarter, registering a near 10% y-o-y rise over the year-ago period.

TCS and Infosys’ profits surged by 12.27% and 11.77% on a year-on-year basis respectively in Q3FY22. Wipro’s Q3 net profits, though, remained largely flat at ₹2,969 crore. Infosys raised its annual FY22 revenue growth guidance to 19.5%-20% in constant currency from the initial estimate of 16.5%-17.5%, buoyed by a strong business momentum and robust deal pipeline.

Addressing a press conference, Salil Parekh, CEO and MD at Infosys says that the company’s growth was broad-based across industries, service lines and geographies and was driven by the firm’s differentiated cloud and digital capabilities. Digital now contributes as much as 58.5% of the company’s total revenues.

“Our year-on-year growth was the fastest we have had in eleven years. Our growth has been accompanied by resilient operating margins at 23.5%,” says the Infosys CEO.

For Wipro, the cloud ecosystem revenues grew at an “accelerated pace” of 30% on a year-to-date basis, says CEO and managing director Thierry Delaporte.

“Our clients are continuing to place their trust in us to help them turn into digital businesses,” avers Delaporte. “Despite the pandemic, we have delivered a fifth consecutive quarter of excellent performance, strong growth in revenues, acceleration in bookings, sustained operating margins.”

In a earnings briefing, Rajesh Gopinathan, chief executive officer and managing director at TCS, says that it is one of the best quarters the company has enjoyed in many years. “Not just the headline numbers, the broad-based nature of this growth is the stand-out feature. The drivers of this growth come from the digital transformation agenda and the kind of investments that we are seeing our customers making is very closely aligned to the investments that TCS has been making to power this growth and transformation agenda.”

The demand environment as indicated by the key metric of order book grew by 27% on a year to date basis for Wipro in terms of annual contract value (ACV). In fact, bookings have been the “highest ever,” claims Delaporte. ACV for the quarter stood at about $2.85 billion. Wipro’s pipeline of deals show a healthy mix of medium and large deals across all its business lines, adds Delaporte.

“We also continue to see a rapid expansion on small and mid-sized deals which represents growth in our existing accounts as well as expansion of our market portfolios,” says Delaporte. “What stands out is that our win rate in the market has improved dramatically. For this year, our win rate has expanded 300 basis points.”

Infosys signed 25 large deals (over $50 million in value) with TCV of $2.53 billion during the quarter. “This is a very strong indicator of how the business is evolving. Our overall pipeline today is larger than what we had anytime in the past. The demand outlook is good, the digital transformation is strong,” says Parekh. Q3FY22 TCV for TCS stood at $7.6 billion against $6.8 billion in Q3FY21, and the year-to-date TCV hit $23.3 billion.

Companies indicated that the high attrition rate that has gripped the IT industry seems to be showing some initial signs of stabilising. “We now feel more confident of having stabilised our attrition rates in Q3. We expect it to moderate in the next quarter,” says Delaporte.

Nilanjan Roy, chief financial officer at Infosys, says that the company has seen some stability in attrition rates. “The volume growth has to come from freshers. As we ramp up the freshers into the system, we should see some benefits across. We have taken up our graduate hiring programme to 55,000,” says Roy.

Wipro said that it is on course to onboard 70% more fresh talent from campus hiring in FY22 over the previous year. The IT bellwether plans to hire 30,000 more freshers in FY23. TCS has added 34,000 freshers in Q3 itself and expects to hire more in Q4. Roy said that in order to bridge the talent gap, Infosys is looking at “differentiated talent” and has onboarded digital specialists with different skill sets. Also, “reskilling remains core to our fundamental business model,” says Roy.

Infosys said that voluntary attrition percentage (LTM-IT services) stood at 25.5% in Q3 compared to 11% in the year-ago quarter. Wipro’s attrition rate during the quarter stood at 22.7%. TCS said that it has restricted attrition at 15.3%, “lower than industry standards.”

Amid rapid spread of the Omicron variant, Wipro announced closure of its offices globally for the next four weeks. “Our plans to return to office even in a hybrid model for fully vaccinated employees will be calibrated in the context of the evolving situation,” Delaporte says.

For Infosys, it is largely work from home for employees currently. If things improve, employees may be able to return to offices in the later part of the quarter, the firm projects.

Shares of TCS are trading at ₹3,873.30 apiece on the BSE, up 0.42%. Shares of Wipro are at ₹656 apiece on the BSE, down 5.11% while that of Infosys are at ₹1885.50 apiece on the BSE, up 0.42% against its last close.

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