India's IT exports may witness double-digit growth in FY22: Report

As Indian IT majors adapt to the post-Covid business dynamics and spend heavily on several aspects, IT exports from the country are expected to witnessed a healthy double-digit growth in the ongoing financial year, according to a report prepared by Kotak Institutional Equities.

Noting that there has been strong spending across companies in the IT sector, the report said that the strength in spending will show in the strong growth of IT services companies.

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The compressed timelines have forced the companies to simultaneously transform multiple parts of their enterprise and reskill people instead of a sequential approach, it said, adding that the opportunities created in the process are many, including replatform businesses in the Cloud, address cost pressures, build resilience and security, adjust operations and customer experiences and find new sources of growth.

"We expect IT exports out of India to grow in healthy double digit in FY2022 and close to double digits in the subsequent years, helped by accelerated digital shift and core transformation spends," it said.

The report noted that select large players such as Infosys and TCS could grow in mid-teens driven by share gains and capabilities to drive full stack transformation.

It, however said: "We are wary of supply-side pressures seeping through elevated wage revisions and impacting profitability.

"Large companies (specifically Infosys and TCS) have strong training infrastructure and depth to create talent pools. They are in a position to contain the impact from wage revision. Mid-tier companies may be vulnerable. We are constructive on Tier-1 IT names led by Infosys, Tech Mahindra and HCLT."