IT Q3 Results: Infosys defeats TCS, Wipro with higher sequential growth

Infosys outperformed its peers Tata Consultancy Services and Wipro in the quarter ended December 2021 in terms of sequential growth and said its revenue will grow by 19.5-20% in the fiscal ended March 31, 2022, buoyed by sustained expansion in global technology spending amid the ongoing pandemic.
Marking an industry first, India's three largest IT services firms announced their quarterly results on the same day with industry leader TCS saying it will buy back shares worth Rs 18,000 crore at Rs 4,500 apiece. It also declared an interim dividend of Rs 7 per share, while Wipro declared an interim dividend of Rs 1 per equity share.
Infosys grew 7% in dollar terms over the previous quarter and TCS 4.5%—both beating analyst estimates. Wipro grew 3%, a tad lower than street expectations.
India's $150 billion IT exports industry is benefiting significantly from global corporations moving from data centres to the cloud, enabling applications to be accessed on smartphones and providing insights based on analytics gathered from the digital shift.
"There is demand out there which requires significant focus on customers, talent development and partnerships to participate in this ecosystem," TCS CEO Rajesh Gopinathan said.
Large corporations are also looking at this (technology spends) "from a capex perspective, (as) something they want to invest in, it is not just an opex spend," said Salil Parekh, chief executive officer of Infosys, whose early push to snag large digital transformation deals is boosting his company's topline. "Just as a percentage of their revenue, the amount that (companies) want to spend on technology is going up."
The Bengaluru-headquartered IT company, which hiked its revenue forecast for the full year by three percentage points, said its profit in the third quarter rose by 12% to Rs 5,197 crore, while revenue grew by 23% to Rs 31,867 crore.
TCS recorded a 12.2% increase in profit at Rs 9,763 crore while revenue expanded by 16.3% to Rs 48,885 crore. The Mumbai-based technology major generated a revenue of $25 billion in the calendar year 2021. It does not provide revenue forecasts.
"There is no reason why we should not aspire to continue to grow. Whether that growth will be 10% or 15% or 20%, will vary from period to period. But there is significant (scope) available for growth, and that is what we're setting up the company for," CEO Gopinathan said in an earnings call on Wednesday evening.
Analysts are of the view that TCS' intake of nearly 77,000 freshers in the financial year, so far "indicates strong underlying demand and anticipation of large deal inflows going ahead," said Ashis Dash, research analyst, Sharekhan by BNP Paribas in a note.
Infosys's "excellent all-round growth" in the quarter "despite wage revision of seniors, rising attrition, lower utilisation and higher subcontractor expenses," indicates that the (company) "is getting some pricing benefits," Dash wrote.
Wipro, which completed a year of CEO Thierry Delaporte's new strategy in December, said its third quarter profit remained flat at Rs 2,970 crore and revenue grew by 29.6% to Rs 20,313 crore as it continued to grow business from banks, retailers and health care customers globally.
"We've added a third of the company to our revenue base in (the last) five quarters. This quarter, we are 28% bigger than we were a year ago," Delaporte told ET. The company expects to grow 2-4% in the quarter to March between $2.7 billion and $2.75 billion.
Delaporte said all Wipro offices globally would be closed for the next four weeks as a proactive measure given the spread of the Omicron variant. Plans to return to office by adopting a hybrid model would be calibrated in the context of the evolving situation, keeping employee and client preferences in mind. As of now, 90% of company's employees globally have received the first dose of Covid-19 vaccine and 65% are fully vaccinated.
The three Indian IT firms reported their highest attrition in three years as they saw their people snapped up by rivals as well as global companies and startups that are benefiting from the rise in technology spending worldwide.
Infosys saw attrition shoot up to 25.5%, Wipro reported a spike in attrition to 22.7% and relatively lower for TCS at 15.3%. They also revised upwards their hiring target for the year ahead from campuses as well as experienced professionals.