Reflections 2023: Indian IT industry faces slowdown pangs in 2023

The $245 billion Indian IT industry has hit the slow lane in 2023 after two years of scorching growth. Most large Indian IT services companies including Tata Consultancy Services, Infosys, Wipro, & HCL Tech have guided the market on attaining only low single-digit growth rates in FY24.

Even revenue growth rates in mid-tier IT firms are likely to moderate significantly in the current financial year. And many factors are responsible for the current slowdown.

Firstly, high inflation in the US and European Union led to a stiff rise in interest rates. This resulted in increased cost pressure among enterprises, lowering IT spending to a significant extent.

Indian IT firms, which hired record numbers of employees last year, put the brakes on staff addition this year. Top four IT firms cumulatively cut their workforce by about 38,950 employees in the first half of this fiscal.