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Indian IT leaders TCS and Infosys confident on digital services growth

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New Delhi (Reuters) – Infosys raised its revenue forecast and Tata Consultancy Services (TCS) predicted robust demand on Wednesday as the Indian IT giants said they expect tech spending to continue, particularly for digital services such as the cloud.

Often seen as a bellwether for India’s more than $190 billion software services industry, Infosys (INFY.NS) said large deal wins worth $2.53 billion in the three months to the end of December had boosted its confidence.

Mumbai-based TCS and Bengaluru-headquartered Infosys came to prominence by giving Western clients low-cost solutions to problems such as the Y2K bug and have become global giants in international business as outsourcing grew.

Infosys expects 19.5%-20% revenue growth for the financial year to end-March 2022, compared with a previous 16.5%-17.5% prediction, while retaining its operating margin guidance.

“We had a strong set of large deals and the pricing environment remains stable … the amount clients want to spend on technology is going up,” Chief Executive Salil Parekh told a virtual news briefing.

India’s software services sector has won more business during the COVID-19 pandemic as companies globally look to boost their digital presence and demand IT services ranging from cloud-computing, digital payment infrastructure to cybersecurity.

Infosys, India’s No.2 IT company, reported a near 12% rise in its consolidated net profit to 58.09 billion rupees ($786 million) in the third quarter, beating analysts’ average estimate of 57.05 billion rupees, according to Refinitiv Eikon.

Announcing its earnings for the December quarter, the larger TCS (TCS.NS) said its consolidated net profit rose 12.3% to 97.69 billion rupees, slightly below an average analyst forecast of 98.44 billion rupees, Refinitiv data showed.

“It’s a very broad-based growth that we are experiencing and very broad-based demand environment and we are participating strongly across the full spectrum of demand,” TCS CEO Rajesh Gopinathan told reporters. “That gives us quite a lot of confidence in terms of outlook for the future…”

The quarter saw clients invest in technology for long-term growth, TCS said, adding that its growth was across all services including cloud, cyber security, consulting and services integration, “internet of things” and digital engineering.

Consolidated revenue from operations at TCS jumped 16.4% to 488.85 billion rupees, while Infosys posted revenue of 318.67 billion rupees.

“The large deal wins and the (Infosys) CEO’s statement on large digital transformation pipeline gives (a) good amount of confidence that the Indian (IT) companies are on a strong footing,” Saurabh Jain, assistant vice president at SMC Securities, said.

Another Indian IT major Wipro , which reported earnings earlier in the day, said its December quarter revenue climbed 30%, while net profit remained nearly flat.

($1 = 73.9000 Indian rupees)

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