Demand for Digital Transformation Increases


The Q3 results posted by Tata Consultancy Services (TCS) and Wipro reflect the increasing demand for digital transformation and latest technologies such as cloud amid the ongoing COVID-19 pandemic, says GlobalData.

Reportedly, Infosys, TCS and Wipro recorded a quarter-on-quarter (QoQ) revenue growth of 7.6%, 3.2% and 3.3%, respectively.

Saurabh Daga, Technology Analyst at GlobalData, comments: “Cloud and digital transformation continue to be dominant themes ensuring robust revenue growth for Infosys, TCS and Wipro. For example, Infosys’ largest deal (TCV $3.2bn) till date is an ongoing multi-year contract signed in December 2020, involving infrastructure upgrade and hybrid cloud migration for Daimler Motors.

“Similarly, in September 2021, TCS bagged a 10-year contract to digitally transform Transport for London, a local transport administrator with cloud-based smart mobility platform. Most recently, in December 2021 Wipro won a five-year, $44.5m contract to provide data center services and accelerate migration to hyper cloud for UK-headquartered utility provider National Grid. However, vertical-wise the revenue mix of these three companies is still heavily dominated by banking, financial services & insurance (BFSI) clients, with the sector making up 31.5%, 38.9%, and 35.2% of the Q3 revenues for Infosys, TCS and Wipro respectively.” Daga said.

According to GlobalData’s IT Decision Makers Survey carried out in mid-2021, with rapid growth in digital banking and emergence of open banking and blockchain-based cryptocurrency, the BFSI sector will remain an attractive proposition for IT service providers. The survey reveals that digital transformation spending among BFSI companies grew from an average of 39% of the ICT budget in 2020 to 45% in 2021.

Daga concludes: “Amidst the strong growth tailwinds, talent management remains the biggest challenge, especially for Infosys and Wipro, with attrition rates of 25.5% and 22.7%, respectively. While TCS reported comparatively low attrition rates of 15.3%, it is higher compared to its Q2 attrition level of 11.9%. While these companies are trying to negate the effects of attrition through mass fresher hiring and increasing the compensation for the senior professionals, the steps are also likely to impact their operational margin in the near-term.”


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