Accenture business projected Q2 revenue between $15.20 billion and $15.75 billion, with the median falling short of expert expectations.
American tech giant Accenture issued earnings guidance that is below market expectations as IT spending is bought by macroeconomic headwinds and general uncertainty. Analysts say this is a sign that Indian IT companies could face headwinds and see growth slow down.
According to sources, Accenture predicted second-quarter revenue in the range of $15.20 billion to $15.75 billion seem to be less below than analyst expectations. However, the company exceeded market expectations in its first quarter. Reporting revenues of $15.7 billion up 5% in dollar terms and 15% in local currency from the same period last year. This quarter follows the September-August fiscal year.
The recommendations provided by the large IT company is frequently used as a benchmark for the Indian IT industry. Analysts predict that when the state of the global economy changes, the revenue growth momentum of Indian IT enterprises would decelerate, if not in the coming quarters.
Trouble in IT Indian
India’s outsourcing companies are off to a cautiously hopeful start in their quarterly results season. The biggest software exporter in the nation, Tata Consultancy Services Ltd., announced an 8% gain in net income that was better than anticipated. The operating margin of Mumbai-based TCS, which had fallen to a seven-year low of 23% in the three months leading up to June, increased by one percentage point as a result of a reduction in new hiring.
Therefore, things can become more difficult moving forward. At least until the crisis in Ukraine is over and energy supplies return to normal. European clients, who generally account for a quarter to a third of Indian enterprises’ sales are practically certain to decrease their tech budgets. As the Federal Reserve slows the economy to control inflation, the more significant US market could potentially disappoint.
US companies may still turn to information technology to cut costs as they prepare for an economic downturn. This means new outsourcing orders. However, the madness of IT in times of pandemic is now in the rear view mirror of Indian vendors. Programmers they could hire easily during the Covid-19 shutdown have failed, because of the lack of career development opportunities since the global economy reopened. TCS’s turnover rate last quarter was more than 21%.
Other big IT industy condition
One of India’s four largest IT companies, Wipro said that due to its severe financial situation, it would withhold the variable compensation for mid- and senior-level staff for the first quarter (Q1FY23). The IT behemoth not offer variable or performance-based incentives to staff in the C bands and above, Reported by ET
On the other hand, employees in bands A and B will get 70% of the quarter’s variable compensation. Juniors through team leaders work in Bands A and B. The majority of the crisis’s effects anticipated to be seen by those in mid- to senior-level positions with 7 to 15 years of experience. In the first quarter of FY23, Infosys said it would pay its employees 70% of their average variable pay.
According to PwC, turnover rates in India predicted to stay high since millennials and Gen Z are now more focused on the working environment, quick promotions and higher pay.
In Q1FY23, attrition rates in the IT industry were very high. The highest attrition rate recorded by Infosys at 28.4%, followed by HCL at 23.84% and Wipro at 23.34%.
Indian IT industries are currently facing issues but its high chances to resolve next year within second financial quarter.
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