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<ul><li>Earnings season will begin next week with the results of major IT companies -- TCS on April 11 and Infosys on April 13.</li><li>Digital transformation deals continue to boost IT sector’s growth along with rupee depreciation in the recent months benefiting the sector.</li><li>However, profit margins of these companies are expected to be under pressure because of increase in employee salaries and record hiring.</li></ul>The March quarter earnings season will begin next week with the results of major information technology (IT) companies such as Tata Consultancy Services (TCS) on April 11 and Infosys on April 13. Most analysts believe March is a seasonally weak quarter for IT companies and they expect moderate earnings growth amid margin pressures. The profit margins of IT companies are expected to be under pressure because of increase in employee salaries and record hiring. “Sequential growth for Indian IT will be moderate in March 2022 quarter and in line with historical seasonal trends. Margins will remain under pressure resulting from elevated wage increases, onsite as well as offshore,” said Kotak Institutional Equities. The entire IT sector is struggling to retain employees including top five companies. In fact, in the last quarter <a href="https://www.businessinsider.in/tech/enterprise/news/more-employees-are-leaving-tech-mahindra-than-tcs-and-wipro/articleshow/89291721.cms">more employees left Tech Mahindra </a>than at TCS and Wipro. The report added that talent shortage continues even as the industry has added a record number of freshers. High cost to backfill attrition and retain talent will seep into margins across companies. <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Top IT companies </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Expected revenue growth in Jan-Mar* </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">TCS </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2.7% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Infosys </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2.2% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Wipro </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">3.6% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">HCL Tech </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">1.2% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Tech Mahindra </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">5.2% </td></tr></tbody></table>Source: Emkay Research*Revenue growth in constant currency on a sequential basis Meanwhile, the growth momentum may sustain due to healthy broad-based demand as firms across the world have increased spending on new technologies. “The demand environment is robust at present. There could be moderate risk to demand as fallout of the Russia-Ukraine imbroglio starts impacting key economies. Nonetheless, we believe double-digit growth is feasible for many,” said a report by Kotak Institutional Equities. Higher employee cost and shortage of skilled talent will remain the key challenges in the short term for IT companies. Investors will keenly monitor the management commentary on any impact on technology spending from higher energy prices, inflation and potential economic slowdown, demand trends in key verticals such as banking, financial services and insurance (BFSI), retail, manufacturing and communications, and the attrition rates. <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Top IT companies </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Results date </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">TCS </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">April 11 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Infosys </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">April 13 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Wipro </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">April 29 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">HCL Technologies </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">April 21 </td></tr></tbody></table> SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/startups/news/unacademy-reportedly-lays-off-1000-employees-from-sales-business-and-other-functions/articleshow/90709336.cms">Unacademy reportedly lays off 1000 employees from sales, business and other functions</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/startups/news/bharatpe-ceo-takes-a-jibe-at-ashneer-grover-says-no-money-left-to-pay-salaries-since-grover-stole-it-all/articleshow/90706030.cms">BharatPe CEO takes a jibe at Ashneer Grover, says no money left to pay salaries since Grover stole it all</a>

Profit margins of IT companies must be under pressure for January-March quarter due to record hiring and salary hikes

<keyword id="18635" type="General" weightage="20" keywordseo="amazon" source="Orion">Amazon</keyword> is starting the year back in the black. The e-commerce giant on Thursday reported a <keyword id="6362247" type="General" weightage="20" keywordseo="profit" source="Orion">profit</keyword> of USD 3.2 billion for the first quarter, far exceeding analysts' estimates, CNN Business reported on Friday. The Seattle-headquartered firm reported a loss of USD 3.8 billion in the year-ago quarter. The swing to a profit comes as Amazon has ramped up its cost-cutting measures in recent months. The company has announced two rounds of <keyword id="6357067" type="General" weightage="20" keywordseo="layoffs" source="Orion">layoffs</keyword>, cancelled products and nixed physical store expansions, according to CNN Business. It also comes as key areas of Amazon's business continue to grow despite lingering recession fears possibly weighing on corporate and consumer spending. The company's revenue increased 9 per cent during the quarter from the prior year. Amazon expects second-quarter net sales to grow between <keyword id="98680" type="General" weightage="20" keywordseo="5-per-cent" source="Orion">5 per cent</keyword> and 10 per cent from the same period the year before, or be between USD 127 billion and USD 133 billion, CNN Business reported. "The results indicate that ongoing cost-cutting measures are having a positive impact on Amazon's business prospects," said Jesse Cohen, senior analyst at Investing.com. "Amazon's strong guidance for Q2 revenue is another indicator that the company may be starting to come out of the woods." Amazon Web Services, which has long served as a profit engine for the company, also experienced double-digit percentage growth during the quarter, in another positive sign for its overall business. <keyword id="291131" type="General" weightage="20" keywordseo="aws" source="Orion">AWS</keyword> segment sales rose 16 per cent from the year before to USD 21.4 billion, CNN Business said, adding, "That comes after sales growth slowed in the previous quarter, as cloud customers tightened their purse strings due to uncertainty about the economy's health." "While our AWS business navigates companies spending more cautiously in this macro environment, we continue to prioritise building long-term customer relationships," Chief Executive Officer Andy Jassy said in a statement accompanying the earnings release. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/indian-stock-indices-hold-steady-as-investors-monitor-earnings-wipro-is-top-gainer/articleshow/99834835.cms">Indian stock indices hold steady as investors monitor earnings; Wipro is top gainer</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/sebi-bans-five-entities-in-lic-front-running-case-impounds-2-44-crore/articleshow/99837998.cms">SEBI bans five entities in LIC front running case, impounds ₹2.44 crore</a>

Amazon posts USD 3.2-bn profit as it goes through multiple layoffs

<ul><li><keyword id="10862" type="COMPANY" weightage="20" keywordseo="Wipro">Wipro</keyword> — the fourth largest IT services company in India — is planning to promote its 5,000 employees, thanks to the increasing attrition rate during the second quarter. </li><li>The company also rolled out a retention bonus of nearly ₹100,000 to its fresh campus hires. It also offered bonuses to employees with upto three years of experience. </li><li>Wipro added nearly 6,603 employees during the second quarter, taking the headcount to 181,453 from 174,850 in the last quarter. </li><li>The software major reported a net profit of ₹25.5 billion for the second quarter of 2019-20 fiscal. </li></ul>Wipro — the fourth largest IT services company in India — is planning to promote 5,000 of its employees, to check its increasing attrition rate. The technology giant recorded an attrition rate of 17% for the quarter ending in September. “Attrition (rate) has been a good story for us as compared to others. We have given salary hikes and now are looking at a huge number of promotions in the coming quarter. Around 5,000 people in the experience range of five to eight years will get promoted," Saurabh Govil, HR head, Wipro <a href="https://www.business-standard.com/article/companies/wipro-plans-to-promote-around-5-000-employees-to-check-attrition-119102100017_1.html">told </a>Business Standard. The company also rolled out retention bonus of nearly ₹100,000 to its fresh campus hires and those with upto three years of experience. “Junior-level attrition is slightly higher than the company average. However, it is lower among performers as they get higher bonuses, incentives and salary hikes," Govil added. While auto and textile sectors face troubled waters leading to job losses, the IT sector seems to be rebounding with a positive hiring sentiment. Wipro added nearly 6,603 employees during the second quarter, taking the headcount to 181,453 from 174,850 in the last quarter. The three IT giants — <keyword id="6357150" type="DOMAIN" weightage="20" keywordseo="tcs">TCS</keyword>, Wipro and <keyword id="6354512" type="COMPANY" weightage="20" keywordseo="Infosys">Infosys</keyword> — collectively hired 28,157 employees in the quarter ending September. This is a 59% jump from that of the June quarter, which recorded a net hiring of 16,687 employees, Businessline <a href="https://www.businesstoday.in/current/corporate/tcs-infosys-wipro-hire-28000-employees-september-quarter/story/385196.html">reported</a>. Wipro is also planning to hire more consultants so as to drive sales in the coming quarters. “We are hiring more people in this consulting space. It is paying us back, well," he said. The software major reported a net profit of ₹25.5 billion for the second quarter, registering a 35% growth as compared to last year. See also: <a href="https://www.businessinsider.in/thelife/personalities/news/top-10-tech-billionaires-on-the-forbes-list-of-100-richest-indians/articleshow/71539382.cms">Top 10 tech billionaires on the Forbes list of 100 richest Indians</a> <a href="https://www.businessinsider.in/changing-technology-and-financial-crisis-is-affecting-sustainability-says-a-un-report/articleshow/71307065.cms">Changing technology and financial crisis is affecting sustainability says a UN report</a> <a href="https://www.businessinsider.in/azim-premji-gives-more-the-charity-than-his-net-worth/articleshow/71306177.cms">India’s richest tech billionaire has given away more money than what he has right now</a>

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Profit margins of IT companies must be under pressure for January-March quarter due to record hiring and salary hikes

Bhakti Makwana

Amazon posts USD 3.2-bn profit as it goes through multiple layoffs

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Wipro is giving promotions and bonuses to check growing attrition

Prerna Sindwani

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