IT earnings seen to be weak in Q3

Revenues of IT services companies for the December 2023 quarter are expected to be weak, since a full-fledged recovery in the IT sector is still some time away.

The third quarter could also reflect pressure on operating margins of software players thanks to the wage hikes and higher-than-expected furloughs. However, some firms may be able to defend their margins by resorting to cost cuts.

The furloughs are likely to have not only dented the already lower discretionary spends of clients, but also extended the timeline for deal closures for IT companies.