Revenue Growth For IT Services In US$ Terms Expected To Be Flattish

With 90-95% achievement of work from home and recovery in demand for IT services led by acceleration in adoption of digital demand, the revenue growth for IT services in US$ terms is expected to be flattish in FY2021 and US$5%-8% in FY2022, ICRA has stated in a report on IT services.

However, the rating agency expects rofitability during H1 FY2021 to improve owing to lesser overheads during the lockdown period - primarily travel & general administrative expenditure. The trend is expected to reverse once the pandemic situation resolves; FY2022 margins will remain in line with pre-Covid levels.

"Demand for IT services has been mildly impacted during the current course of the Covid-19 pandemic. While all end user industries have been impacted by Covid-19, certain sectors such as

travel/hospitality, retail, oil/gas has been impacted more severely. However, higher adoption of digital services has mitigated the impact to a large extent. 90-95%

achievement of work from home for majority of the IT services players by April 2020 with seamless integration for Application, IMS, Analytics.

BFSI vertical impacted initially due to required modification in confidentiality agreements with clients; BPO impacted due to infrastructure constraints," the rating agency has noted.

It has noted that the pricing pressure mostly seen in legacy work during contract renegotiations though compensated by new digital transformation deal.