Indian Tech Firms Have Bigger Problems Than the Fed
It’s time for the country’s outsourcing companies to make bold decisions as consulting firms muscle in on their patch.
Mounting challenges for India’s tech firms.
Photographer: Dhiraj Singh/BloombergThe quarterly earnings season for India’s outsourcing firms has begun on a cautiously optimistic note. Tata Consultancy Services Ltd., the largest of the country’s software exporters, reported better-than-expected growth of 8% in net income. Its operating margin, which had slumped to a seven-year low of 23% in the three months to June, rose by 1 percentage point as Mumbai-based TCS dialed down on new hiring.
From here on, however, things may get challenging. European clients, which typically account for a quarter to a third of Indian firms’ sales, are almost certain to cut their tech budgets — at least until the war in Ukraine comes to an end and energy supplies normalize. The more important US market may also disappoint as the Federal Reserve slows the economy to tame inflation.