Deal pipeline, AI push put IT firms on growth path

DOMESTIC INFORMATION TECHNOLOGY (IT) firms may still not be out of the woods when it comes to improvement in spending by clients across the globe.

- SAMEER RANJAN BAKSHI

This is evident from the muted numbers reported by at least three of them (TCS, Infosys and Wipro) in the October-December quarter.Analysts are of the view that companies across the world are yet to revive their IT spending, and budgets are unlikely to pick up going ahead.

Shares of the IT companies, led by bellweather TCS and Infosys, have however, been rallying since last Thursday, when the earnings season kicked off.According to analysts, a key reason for the growth is the positive sentiment exhibited by the IT firms in pushing ahead with initiatives, which can lower costs and improve efficiencies. Another factor that fuelled the growth is that these firms are seen promoting their capabilities in artificial intelligence (AI) where demand is picking up. The outlook on the deals front is also seen as improving, though execution could take longer.

Large deal wins for Infosys during the quarter remained strong at $3.2 billion, with 71% of them being net new deals. According to Jefferies, Infosys' net new order book stood at $2.2 billion, which provides comfort.