Modest IT growth expected (3-5%) for FY25, says Icra

The Indian IT sector is anticipated to experience a modest revenue growth of 3-5% in the fiscal year 2025, as per a report by domestic rating agency Icra Ratings released on Monday. The agency forecasts that hiring in the sector will remain subdued in the short term until there is a noticeable uptick in growth momentum.

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Despite concerns regarding revenue growth, Icra Ratings predicts that the profitability of IT companies will remain resilient, with operating profit margins projected to range between 21-22% for the Indian IT sector in FY25. However, the sector has faced challenges in the ongoing fiscal year, with only a 2% revenue growth recorded in the first nine months of 2023-24, compared to the anticipated 3-5%.

Persistent macroeconomic challenges in key markets like the US and Europe have resulted in reduced discretionary IT spending by corporations, contributing to the expectation of tepid revenue growth even in FY25, according to Deepak Jotwani, the sector head at Icra Ratings.