IT companies set for gradual Q3 recovery with BFSI boost

Mid-tier IT firms likely to outpace industry majors

- PADMINI DHRUVARAJ

IT SERVICES COMPANIES are projected to see a gradual recovery in the October-December quarter, driven by stronger demand in the banking, financial services, and insurance (BFSI) sector, as well as a reduction in project cancellations, shorter furlough periods, and easing macroeconomic uncertainties.

While growth is expected to remain modest on a sequential basis, the outlook for individual companies and total contract value (TCV) is notably better than the previous year, according to analysts.

The key drivers of recovery include increasing digital investments in financial services, continued adoption of cloud and data services, and the resolution of uncertainties surrounding elections in developed markets. According to Kotak Institutional Equities, "Furloughs during the December quarter are significantly lower than last year, supporting growth momentum".