Global headwinds to deeply impact IT revenue growth in FY24, says CRISIL

Global macroeconomic and financial sector headwinds are set to take a deep toll on the domestic IT companies’ revenue growth in FY24, according to a CRISIL report

Global macroeconomic and financial sector headwinds are set to take a deep toll on the domestic IT companies' revenue growth in FY24, a report said on Friday.

The ₹10 lakh crore sector is likely to witness revenue growth plunging by up to 9 percentage points to 10-12% in FY24 as against the nearly 20% growth estimated in FY23, Crisil Ratings said.

"Headwinds in key markets, especially the BFSI (banking, financial services and insurance) segment in the US and Europe, will affect the revenue growth of domestic IT services companies,” it's senior director Anuj Sethi said.

The BFSI segment, which has seen quite a few instances of stress after the Silicon Valley Bank collapse, will see revenue growth getting halved to mid-single digit, the agency said, adding that this impact would be marginally offset by 12-14% growth in the manufacturing segment and 9-11% growth in other segments.

IT Industry lobby grouping Nasscom has ceased its practice of giving a revenue growth estimate for the next fiscal. The sector, which supports over 50 lakh people directly, has witnessed a slew of changes lately including some top companies reporting a decline in head count.

The rating agency, which analysed data from 17 companies which account for 71% of the ₹10.2 lakh crore Indian IT sector revenue, said the last two fiscals have been one of the best for the industry as it had put out a 19% growth in FY22.

Going ahead, healthy growth in cost-optimisation deals, along with strong digital solutions, cloud, and automation capabilities, and a wide range of offerings will support the demand scenario, it said.