IT Services Q3 Earnings Preview - Strong Growth Despite Seasonality: KRChoksey
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KRChoksey Research Report
The IT sector is set to post another strong number in a seasonally weak quarter (furlough impact). The growth outlook remains robust, based on-
increasing velocity of digital transformation/shift to cloud,
strong annual contract value as large deals are broken into mid-sized deals,
improving deal pipeline,
accelerated fresher hiring, and
improving alignment/investment in the hyperscalers/software-as-a-system ecosystem.
Tier-I technology companies are expected to deliver up 2.4%-4% QoQ and mid-tier technology companies are expected to post a better QoQ (up 4.5-9% QoQ) as compared to it’s large peers.
The margin during the quarter is expected to remain stable on a sequential basis; however, there will be a YoY margin decline as companies rolled out two cycles of wage hikes since December 2020 to counter attrition.
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