Indian IT services industry will see a muted revenue growth of 4-6% in FY25: ICRA

Bengaluru: The Indian IT services industry is likely to register a muted revenue growth of 4-6 per cent, for the second consecutive in the financial year 2025 (FY25), according to ratings agency ICRA.

Its half yearly report on the industry, however, expects the sector’s operating profit margin (OPM) to remain healthy at approximately 22 per cent in FY25 with attrition levels stabilising in the near term after witnessing a significant decline.

Despite expectations of continued subdued growth, ICRA has maintained a stable outlook on the Indian IT services industry, led by a well-established business position, expectation of healthy earnings and cash flow generation, and strong balance sheets of the industry players.

“Though the revenue conversion of the orders has slowed down, the order book and deal pipeline of most IT services companies remains strong. This, coupled with the increasing prominence of technological spend by clients as part of their overall capital allocation strategy, is expected to support the growth momentum once the macroeconomic headwinds subside over the medium term,” said Deepak Jotwani, Vice President & Sector Head – Corporate Ratings, ICRA.

Hiring is also expected to remain muted in the near-term until growth momentum picks up materially, as per the agency. It may be recalled that hiring by IT services companies was at an all-time high in FY2022 and H1 FY2023, buoyed by strong demand for digital technologies and to combat the surge in attrition levels.