Attrition rates in the information technology industry should remain at elevated levels and supply will continue to lag ever-increasing demand although some moderation is expected starting FY23, according to a Motilal Oswal Financial Services Ltd report.
Attrition rates have been high across companies through the last few quarters as demand for technology talent with digital skills continued to outstrip supply.
IT companies will continue to post strong growth numbers on the back of tailwinds for the industry on account of digital and cloud transformation initiatives with enterprise clients. Hiring trends in recent quarters indicate continued strength in demand with good visibility, Motilal Oswal said.
“We see pricing flow through as a key monitorable over the next two quarters as commentary from across the universe is indicating increased price comfort on deals. This should start reflecting in FY23 revenue and will help companies to offset some of the margin headwinds,” the report said.
Revenue commentary should remain strong in Q4 FY22, with no impact on demand from the Russia-Ukraine war and inflation. While tier-II players would continue to outgrow tier-I companies, the gap should start shrinking in the fourth quarter. Revenue growth is expected to moderate sequentially in the fourth quarter as a high base effect comes into play.
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