Understanding the IT Industry
Overview
We firmly believe that trends that we saw in the previous year will certainly encourage
IT service providers to have dynamic growth and operational strategies that can ensure
anti-fragile and pro-growth operations, irrespective of the global business environment
which is too an extent marred by geopolitical disturbance and other temporary business
resistance from such chaotic scenario.
As we move to 2023-24, we forecast that the industrial landscape will look to assign a
high priority to digital transformation as well as business innovation owing to their
potential to improve operational and cost efficiencies as well as deliver top-notch
customer experience. While achieving business objectives for our clients by leveraging the
potential of technology, we believe that it will also empower us to become reliable
digital transformation partners, catalyzing our evolution from the role of service
providers. Lastly, innovation and adoption of new-age technologies will be strong
differentiators for Tech Service Provider organizations like Dev reaffirmed by IT,
commitment strategic investments in blockchain as well as an actionable focus on other
new-age technologies such as Artificial
Intelligence, Internet of Things, Automation and Cloud.
According to Nasscoms Strategic Review, in FY2023, Indias technology industry
revenue, including hardware, is estimated to cross $245 Bn (8.4% y-o-y growth), an
addition of $19 Bn over last year. Exports, at $194 Bn, are expected to grow at 9.4% in
reported currency terms and 11.4% in constant currency terms. The domestic technology
sector is expected to reach $51 Bn, growing at 4.9% y-o-y. In rupee terms, domestic tech
revenues are expecting a 13% y-o-y growth on the back of continued investments by
enterprises and the government.
The industry continues to be a net hirer, adding nearly 3 lakh employees, taking the
total employee base to ~5.4 Mn (5.7% y-o-y growth), strengthening its position as the
‘Digital Talent Nation for the world. At Dev IT, we are committed to becoming a
strong and reliable provider of employment opportunities and contributing to Indias
status as a supplier of top talent in the technology industry. Further, we are constantly
striving to help our employees accelerate their growth by becoming partners in their
progress.
Source:
https://nasscom.in/knowledge-center/publications/technology-sector-india-2023-strategic-review
Financial Overview:
Consolidated Financial Highlights :
The Key Aspect of your companys consolidated financial performance during the
financial year 2022-23are as follows:
Operational Highlights: The consolidated revenue of the company from Sales is Rs.
13,112.27/- lakhs as compared to Rs. 10091.29/- lakhs in the previous year.
Financial highlights: The consolidated profit of the company is Rs. 902.08/- lakhs as
compared to loss of Rs.
(7.09)/- lakhs in the previous year.
Standalone Financial Highlights:
Operational Highlights: The standalone revenue of the company from Sales is Rs.
12,893.76/- lakhs as compared to Rs. 10,005.83/- lakhs in the previous year.
Financial highlights: The standalone profit of the company is Rs. 872.48/- lakhs as
compared to Rs. 191.51/- lakhs in the previous year.
|
Standalone |
Consolidated |
Particulars |
|
|
|
|
|
2022-23 |
2021-22 |
2022-23 |
2021-22 |
Net Total Income |
12,893.76 |
10,005.83 |
13,112.27 |
10,091.29 |
Less: Operation and Admin |
1,1570.54 |
9,359.18 |
11,723.00 |
9,500.73 |
Expenses |
|
|
|
|
Profit before depreciation and |
1,323.22 |
646.65 |
1,389.27 |
590.56 |
Taxes |
|
|
|
|
Less: Depreciation |
121.32 |
181.02 |
124.83 |
181.86 |
Profit before interest and tax |
1,201.90 |
465.63 |
1,264.44 |
408.7 |
(PBIT) |
|
|
|
|
Less: Interest |
119.66 |
82.82 |
138.81 |
93.62 |
items and tax |
1082.24 |
382.79 |
1,125.93 |
315.08 |
Add: Extraordinary/ |
|
|
- |
(118.50) |
Exceptional Items |
|
|
|
|
Share of Profit/Loss of |
|
|
|
|
Associate |
|
|
|
|
Profit before Tax (PBT) |
1082.24 |
|
1,125.93 |
196.58 |
Less: Taxes (including deferred |
209.76 |
191.28 |
223.55 |
203.67 |
tax and fringe benefit tax) |
|
|
|
|
(PAT) |
872.48 |
191.51 |
902.28 |
(7.09) |
Less: Minority Share in |
|
|
4.63 |
(20.49) |
Company |
|
|
|
|
Profit Attributable to Owners |
|
|
897.45 |
13.40 |
Other Comprehensive Income |
|
- |
|
|
Items that will not be reclassified to profit or loss |
0.52 |
(4.98) |
0.52 |
(4.98) |
Income tax relating to items that will not be reclassified to
profit or loss |
(0.13) |
1.25 |
(0.13) |
1.25 |
Total Comprehensive Income |
872.88 |
187.79 |
897.84 |
9.67 |
for the year |
|
|
|
|
Key changes in significant Financial Ratios:
Details of significant changes in key financial ratios (i.e., change of 25% or more as
compared to the immediately previous financial year):
Key Ratios |
FY 2022-23 |
FY 2021-22 |
Variance % |
Reason for change |
Current Ratio |
2.09 |
1.54 |
35.48% |
This is mainly improved due to repayment of Borrowing and decrease
in trade payables. |
Debt-to-equity Ratio |
0.17 |
0.28 |
-40.12% |
This is mainly improved due to repayment of borrowing and
improvement in net profit. |
hInventory Turn- over Ratio |
25.25 |
14.91 |
69.34 |
Revenue growth and efficient inventory operations during the year
has led to faster inventory churning and thereby the inventory turnover ratio has been
improved. |
Receivables Turn- over Ratio |
3.48 |
3.44 |
1.25% |
|
Net Profit Ratio |
7.15 |
1.93 |
270.63% |
Increase in ratio mainly on ac- count of higher net
profit and sales as compared to previous year. |
Interest Coverage 12.79 Ratio |
7.79 |
64.25% |
Increase in earnings due to better operating margins leads to improve
ratio. |
|
Operating Profit Margin Ratio 9.85 |
4.66 |
111.27% |
Better operational perfor- mance leads to better opera- tional
margin. |
|
Return on Net Worth |
|
|
|
|
Opportunities for the Indian IT industry in 2023-24 where a company like DEV IT can
have a significant play as Tech Service Provider for Domestic and Overseas Clientele from
the Public as well as Private Sector:
Digital Transformation:
Digital transformation presents a compelling opportunity for the Indian IT industry to
leverage its expertise and catapult itself into a position of global leadership. The
convergence of technological advancements, increasing internet penetration, and the
widespread adoption of digital solutions across industries create a fertile ground for
innovation and growth. With a vast talent pool of skilled professionals, the Indian IT
industry is well-equipped to cater to the growing demand for cutting-edge digital
services, including artific cloud computing, ial intelligence, cybersecurity, and data
analytics. Furthermore, the governments focus on initiatives like "Digital
India" and "Make in India" enhances the supportive ecosystem for businesses
to embrace digital transformation.
https://www.fortunebusinessinsights.com/digital-transformation-market-104878
Cloud Computing:
As businesses worldwide continue to embrace digitalization and remote work, the cloud
offers cost-effective, scalable, and secure solutions, making it an indispensable tool for
organizations seeking to enhance agility and operational efficiency. India has an
increasingly strong pool of talent when it comes to innovating, uilding, and b deploying
strong cloud solutions that will add a strong edge to businesses worldwide. Furthermore,
as data privacy and security concerns gain prominence, Indian IT companies can leverage
their expertise to provide robust and compliant cloud solutions, attracting international
clients and propelling the countrys IT industry to new heights in the dynamic landscape
of cloud computing.
https://www.marketsandmarkets.com/Market-Reports/cloud-computing-market-234.html
Artificial Intelligence: In 2023-24, AI (Artificial Intelligence) represent formidable
opportunities for the Indian IT industry due to their transformative potential across
various sectors. As businesses worldwide continue to prior- itize digital
transformation, AI offer innovative solutions to enhance efficiency, streamline processes,
and drive data-driven decision-making. Indias extensive resources in technology, whether
they are engineers or data scientists, the country provides a competitive advantage,
enabling the development of cutting-edge AI-powered applications, services, and products.
https://www.precedenceresearch.com/artificial-intelligence-market#:~:text=The%20global%20artificial%20intelli-gence%20(AI,USD%20167.30%20billion%20in%202022.
Internet of Things (IoT): With the constant increase of connected devices and an
evolving focus on digitization
and smart technologies, IoT is poised to transform businesses and daily life. India is
a fast-growing economy pos- sessing talented IT professionals, which makes the
country uniquely positioned to leverage the potential of IoT. The countrys robust IT
industry can leverage its expertise in software development, data analytics, and cloud
computing to design and deploy innovative IoT solutions. Furthermore, IoTs potential to
optimize processes, enhance efficiency, and create new business models across agriculture,
healthcare, manufacturing, and smart cities aligns well with Indias developmental needs.
By seizing the IoT opportunities, the Indian IT industry can not only drive economic
growth and job creation but also contribute significantly to the nations overall
technological advancement and global competitiveness.
https://www.marketsandmarkets.com/Market-Reports/internet-of-things-market-573.html#:~:text=What%20
is%20the%20IoT%20market,%25%20during%20the%20forecast%20period.%20.
Remote Work Enablement: With advancements in technology and connectivity, remote work
has become increasingly viable, allowing IT companies to access talent from tier-2 and
tier-3 cities, reducing the dependency on crowded urban centres. This decentralization of
the workforce not only enables cost savings inrms of office te infrastructure but also
promotes a healthier work-life balance for employees. Additionally, the Indian IT industry
can now expand its global reach, providing services to clients across different time
ographical zones without constraints. Embracing remote work will not only make Indian IT
companies more competitive in the international market but also foster a culture of
innovation and efficiency in the industry.
https://www.marketsandmarkets.com/Market-Reports/remote-workplace-services-market-78845327.html
Risks and Challenges In 2023-24, the Indian IT industry may face several risks and
concerns that could impact its growth and performance. Some of the key risks and concerns
are as follows:
Economic Factors:
Economic fluctuations and global uncertainties can have a significant impact on the IT
industry. Factors such as inflation, changes in government policies, exchange rate
fluctuations, and global trade tensions canaffect business operations, investments, and
client spending, leading to a slowdown in the industry.
https://www.techtarget.com/searchcio/news/252523025/Technology-costs-rise-as-inflation-hits-hardware-services
Regulatory Environment:
Changes in government regulations, both domestically and internationally, can pose
challenges for the Indian IT industry. These include policies related to data protection,
cybersecurity, intellectual property rights, immigration, and taxation. Compliance with
evolving regulations can increase operational costs and create legal and operational
complexities.
https://economictimes.indiatimes.com/tech/technology/85-intermediaries-say-new-it-rules-will-negatively-impact-ease-of-doing-business/articleshow/92659666.cms?from=mdr
Talent Crunch:
The availability of skilled talent is crucial for the IT industrys success. However,
there may be concerns regarding the supply and retention of highly skilled professionals.
The industry needs to address issues related to skill gaps, upskilling, and attracting and
retaining top talent to remain competitive.
https://www.tpci.in/indiabusinesstrade/blogs/scarcity-of-tech-talent-a-growing-glitch-for-global-industry/
Rising Labor Costs:
Labor costs in India have been increasing over the years. As the industry continues to
grow and the demand for skilled professionals rises, there may be further upward pressure
on wages. Higher labor costs canmpact profit i margins and make it challenging to remain
cost-competitive in the global market.
https://www.wsj.com/articles/tech-wage-inflation-puts-pressure-on-
Technology Disruptions:
Rapid advancements in technology, such as automation, artificial intelligence (AI), and
machine learning, can disrupt traditional IT business models. While these
technologies provide opportunities, they also pose risks by replac- ing certain job
roles and requiring significant investments in reskilling and adapting to new business
paradigms.
Source: Technological Disruptions and the Indian IT Industry: Employment Concerns and
Beyond by Hasti-mal Sagara & Keshab Das
Cybersecurity Threats:
With the growing digitization and interconnectedness of systems, cybersecurity threats
become more prominent. The IT industry faces the risk of cyber attacks, data breaches, and
information theft. Ensuring robust cybersecurity measures and investments in advanced
security technologies are crucial to protect client data and maintain trust.
https://telecom.economictimes.indiatimes.com/news/industry/ip-theft-cyber-security-accidents-top-3-threats-for-indian-industry-survey/99626888
Geopolitical Uncertainties:
Global geopolitical events and tensions can impact the IT industrys operations,
especially when it comes to international client relationships and cross-border
collaborations. Trade disputes, visa restrictions, and political instability in key
markets can disrupt business operations and affect market demand.
https://www.diva-portal.org/smash/get/diva2:1620571/FULLTEXT01.pdf
Sustainability and Environmental Concerns:
Increasing focus on sustainability and environmental responsibility requires the IT
industry to adopt eco-friendly practices and reduce its carbon footprint. Meeting these
requirements may involve additional costs and resource allocation, which can impact the
industrys profitability and competitiveness.
https://www.businesstoday.in/opinion/columns/story/why-esg-is-important-for-indias-it-sector-373388-2023-03-14
Competition from Emerging Markets:
Several emerging markets, including China, the Philippines, and Eastern European
countries, are becoming strong competitors in the IT industry. These countries offer lower
labor costs, government incentives, and rapidly developing technology ecosystems. The
Indian IT industry needs to stay innovative and competitive to maintain its position in
the global market.
https://indianexpress.com/article/business/business-others/it-industry-facing-tough-competition-from-viet-nam-philippines-5133678/
To mitigate these risks and concerns, the Indian IT industry needs to focus on
continuous innovation, investing in R&D, diversifying service offerings, nurturing
talent, adapting to evolving technologies, and buildin g strong client relationships.
Additionally, collaborating with academia, industry bodies, and the government can help
address regulatory challenges and promote a conducive business environment.
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