Demand likely to slow down for IT companies in H2

Indian IT services companies are likely to see a slowdown in demand in the second half of this fiscal as clients are prioritising spends towards quicker ROI projects and increasing focus on cost optimisation.

“Areas of weak demand widened further in Q2 FY23. Infosys management pointed to emerging weakness in the telecom and hi-tech verticals, especially in discretionary spends, apart from the slowing demand in retail and mortgage called out in the previous quarter (Q1). Additionally, moderation in hiring across the IT pack for second consecutive quarter also implies that companies in the sector are baking in demand slowdown in H2 FY23 and FY24,” analysts at ICICI Securities said.