The Q3 results of Indian IT services companies will be announced this week onwards. What makes the Q3 results more crucial is the fact that these companies have been facing multiple growth challenges over the last few quarters. Going by the earlier patterns, Q3 is usually a little dull quarter for many companies as many of their US clients, in particular, are closed for the holiday season in December till early January. However, for many US companies it is a year ending since most of them work on a calendar year basis and need to spend their yearly budget by December.
Experts such as Alok Shende of Ascentius Consulting feel that the present Q3 will be a better quarter for Indian IT services companies when compared to the previous year since the Q3 of 2018 has been very positive in the US with unemployment rates at one of the lowest levels in the last few years. “If the US economy is doing well with a sharp reduction in the unemployment rates, it is likely to be a good news for the Indian IT services companies as majority of their clients are in the US. When the US economy is looking positive it brings in increased confidence among the US companies to sign new contracts and embark on new projects for which they will require the help of Indian IT services players. Also, when new investments are happening in the economy it is bound to boost the business environment. I feel that the positivity in the US economy will improve the performance on the Indian IT services companies,” remarked Shende.
Kris Lakshmikanth, founder and CEO of the executive search firm Head Hunters India, feels that though the Indian IT services companies may witness growth during this quarter it will still be predominantly a single digit growth as December is particularly a dull quarter with the holiday season and also because many of the US clients are very slowly embarking on their digital projects and may not have new contracts for the Indian IT services companies. “It is year end for many of the US companies and by the time they reach this quarter they would have exhausted their yearly budgets and will come up with new investments only in January. Companies such as Infosys are still facing growth challenges and it is very difficult to change the company's DNA as it is a very bottom line focused company. I feel that the mid-tier IT services companies such as MindTree and NIIT will do well during this quarter due to their specialised focus on certain technologies. Overall it will be a dull quarter for the Indian IT services companies,” said Lakshmikanth.
