India's largest information technology firms' earnings were in line with estimates for the third straight quarter as demand for digital services and newer technologies remained elevated in the second year of the pandemic.
Among the top four software services providers, Infosys Ltd. and Wipro Ltd. guided for double-digit revenue growth for the remainder of the financial year 2022. Tata Consultancy Services Ltd. and HCL Technologies Ltd. maintained their guidance for the last quarter ending March.
According to BloombergQuint's calculations, the top four software services exporters are likely to surpass 2020-21 revenue at the end of the ongoing fiscal.
Here's how TCS, Infosys, HCL Technologies and Wipro fared in the October-December period:
Revenue
All the four companies reported sequential revenue growth in the third quarter on account of deal wins and rising demand for digital services. HCL Tech's revenue rose at the fastest pace of 8.11%, while Wipro reported the slowest sequential growth.
Operating Margin
Wage hikes, lower utilisation and hiring dented margins of most Indian IT firms in Q3. Margin contracted the most for TCS at 60 basis points, while HCL Tech was the best performer with a flat margin.
Deal Wins
TCS won new deals worth $7.6 billion, taking the total deals to $23.3 billion in the first nine months of the ongoing fiscal. The company had bagged deals worth $31 billion in FY21.
Infosys won deals worth $2.53 billion in the October-December period, compared with $2.15 billion in the prior quarter.
HCL Tech won new contracts worth $2.1 billion with a net eight large services deals and eight significant product deals across technology and services, financial services and life sciences and healthcare in the October-December quarter.
Wipro closed 11 large deals worth $600 million during the quarter.
Net Employee Additions
TCS added 28,238 people to its workforce—its highest ever in a quarter. The company's total workforce strength stands at nearly 5.57 lakh.
Infosys hired 12,450 people and Wipro's quarterly addition stood at 10,306. HCL Tech added the least number of new employees at 10,143 among the four companies.
Of the total employee strength at the four companies, women constitute the highest 39.6% at Infosys, 36.3% at Wipro, 36% TCS and 27.7% at HCL Tech.
Attrition Rate Up
Attrition rate rose for the four companies during the third quarter. Infosys' churn expanded by 5.4 percentage points sequentially, the most among peers.
HCL Tech's attrition expanded by 4.10 percentage points, followed by TCS' 3.40. % quarter-on-quarter. Wipro's 12-month trailing attrition rate increased 2.20 percentage points.
Guidance
HCL Tech maintained its revenue and EBIT margin guidance for the ongoing fiscal unchanged. It expects revenue to grow in double digits in constant currency in FY22, while EBIT margin is projected to be between 19% and 21%.
TCS, too, stuck to its double-digit growth guidance for FY22 in its earnings commentary.
Infosys raised its revenue growth estimate to 19.5-20% for the ongoing fiscal from 16.5-17.5% projected at the end of second quarter. Going by the revenue in the first nine months, that implies a flat quarter-on-quarter growth in Q4. The company also retained its operating profit margin forecast at 22-24%.
Wipro guided for a revenue of $2,692-2,745 million for the March quarter. That's a 2-4% sequential growth projection and translates into a revenue growth of 26.9-27.5% for fiscal 2022.
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