Indian IT Sector to Witness Modest Growth in FY25; Hiring to Stay Subdued: ICRA
The Indian IT sector is expected to experience moderate revenue growth of 3-5% in FY25, with hiring activity remaining sluggish in the near term, according to ICRA Ratings. The industry recorded a mere 2% growth in the first nine months of FY24, significantly lower than the 9.2% seen in the same period of FY23. Macroeconomic challenges in key markets such as the US and Europe have led to reduced discretionary IT spending, affecting overall sector performance.
Despite these concerns, ICRA projects that Indian IT companies will maintain strong operating profit margins of 21-22% in FY25. The report highlights that while revenue growth may be slow, essential IT spending and cost-optimization deals continue to drive demand, providing some stability.
Hiring in the sector is expected to remain muted; however, attrition rates are likely to stabilize around the long-term average of 12-13%. The slowdown in hiring, coupled with strong recruitment activity in previous years, has helped correct the demand-supply imbalance in the job market.
ICRA remains optimistic about the sector’s long-term outlook, suggesting that growth momentum could rebound once macroeconomic conditions improve. With a strong deal pipeline and increasing dependence on technology investments, IT services companies are well-positioned to regain momentum in the future.