IT firms riding on robust incremental revenue wave

On Cloud Nine

- Infy in striking distance to overtake Cognizant

- Wipro added $2.3 bn incremental revenue

- HCL Tech gained $1.31 bn in FY22

Bengaluru: Indian IT services biggies have witnessed one of the best additions in their incremental revenues in FY22 with many adding more revenues than most mid-tier IT firms' annual turnovers.

Among the top-4 domestic IT services companies, market leader Tata Consultancy Services (TCS) led the race. Apart from its sound revenue growth rate, its high revenue base also helped in clocking these numbers.

In FY22, TCS added its all-time high incremental revenues of $3.5 billion, enabling the Tata Group company to cross the $25 billion revenue mark.

"Since the start of the last decade, the company has grown over four times, comfortably outperforming its largest global competitors," TCS said in its annual report.

It was, however, Infosys that reported the highest rate of growth in its incremental revenues among the top-4 IT services firms. The Bengaluru-headquartered firm added $2.75 billion of incremental revenues to take its total turnover to $16.31 billion.

Sources in the know said the company is in striking distance to overtake Cognizant in revenue terms in the near future. Under the new CEO, Wipro also had a stellar run in FY22 after years of subdued performance. The company added $2.3 billion worth of incremental revenue to take its total turnover in IT services segment to $10.36 billion. This was one of the best performances of the company in the last decade.

India's third largest IT services firm in revenue term, HCL Technologies added $1.31 billion of incremental revenues in the last financial year to reach a turnover of $11.48 billion in FY22.

However, the growth rate of incremental revenue additions is likely to come down this year as multiple challenges in terms of economic slowdown and geopolitical uncertainty have raised their heads.

"As compared to FY22, FY23 too is missing large-deal contributions, which we estimate bring 2-3 per cent of incremental revenues to companies," ICICI Securities said in a note.

Among the mid-tier companies, Tech Mahindra saw incremental revenue addition of close to $890 million with a total turnover of $5.99 billion. L&T Infotech is another strong performer which saw an incremental revenue addition of $430 million in FY22.

Mindtree added around $340 million of incremental revenue, one of the highest for the company in recent years.

"The rate of growth in incremental revenue addition remained one of the strongest for Indian IT firms in FY22. Given the growth guidance, it has to be seen how it pans out in FY23," said an IT sector analyst.