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Mint
4 hours ago
- Business
- Mint
The spectre of AI is staring Indian IT in the face
The advance of artificial intelligence (AI) may shrink some business and lead to reshuffle of employees, but it will also create new revenue streams, Hexaware Technologies Ltd CEO Srikrishna Ramakarthikeyan said. His comments came after Hexaware slipped two places in the Indian IT pecking order to No.10, ending the June quarter with $382 million in revenue, up 2.8% sequentially. 'On the negative side, I think there will be some compression in IT operations when new deals are done or when deals are renewed. There's some compression in software development as a consequence of AI," Ramakarthikeyan said on Friday. New opportunities Still, he said AI is going to create new revenue, even as the negative impacts are not 'significant enough." 'On the other hand, I think AI is going to unleash a number of new revenue opportunities for our business. The first and foremost is data," he added. Hexaware is not the first to note the impact of disruption. GenAI's impact will be the highest in business process outsourcing, HCL Technologies Ltd MD and CEO C. Vijayakumar said at an event two years ago. "Second will be application development, as the role of Gen AI was minimal here. Application and infrastructure operations, incremental benefit would be marginal," Vijayakumar had said. While Gen AI was not depressing prices for existing services, it could start in 2024, Vijayakumar had said then. In February this year, he said HCL Tech has been trying to "deliver twice the revenue with half the people." Reshuffles While AI isn't currently changing staffing, future AI-powered coding may shift Hexaware's needs from junior staff to those with specialized knowledge, leading to minor workforce adjustments, all within the context of a global talent shortage," Ramakarthikeyan said. 'So, there could be marginal reshuffling, but that's what it takes to deliver service." "We also believe that AI/Gen AI will lead to compression of revenue for the industry in the next 24-36 months as companies self-cannibalize to hold on to their existing clients," Girish Pai, head of equity research for Bank of Baroda Capital Markets wrote in a note dated 26 July. Companies will look to achieve more with fewer people, an analyst said. 'It is very possible that a 1,000-person IT services startup using AI could achieve $1 billion in the next five years," said R. Wang, founder of Constellation Research. He said IT outsourcers may adjust headcount going forward. Recalibrating 'Expect more reductions over time as these tech majors have to recalibrate their workforces and also adjust to changing client expectations. We are in the midst of a massive transition that will transform white-collar work as we know it," Wang added. The Big Five of Indian IT reported revenue growth of 15-25% in FY22. Three years later, growth slowed to 3.8-4.3% for the full year, and two of them saw a revenue decline. At least one has analyst called out this trend in the past. "In particular, we believe that renewals will be challenging since customers will seek, and likely get, lower renewal prices than historical norms as the power and capabilities of generative AI increase," said Keith Bachman, an analyst at BMO Capital Advisors, in a note dated 5 December, 2024. Headcount This is prompting them to adopt different measures. On Sunday, TCS said it would cut 2% of jobs, partly attributing its decision to AI. Earlier, HCL Technologies said it would reduce headcount outside India as automation takes up lower-end skills. Wipro has asked many employees to complete a mandatory English assessment. Mint had reported in February that pay hikes for several senior executives at LTIMindtree would depend on a coding and general math-based assessment. "Our view is that AI-related productivity benefits could be meaningful in the 20-30% range over time. Hence, all services providers will need to 1) gain share and/ or 2) enable and capture new addressable market opportunities to sustain growth. We remain concerned on impact to long-term growth from AI efficiency," said BMO Capital Markets analysts Keith Bachman, Adam J. Holets, and Bradley Clark, in a note dated 23 July.
Time of India
29-04-2025
- Business
- Time of India
India ranks among top IPO markets with $2.8 billion raised in Q1 2025: EY Report
Live Events India's Initial Public Offering (IPO) market continues to demonstrate resilience, securing a 22% share of global IPO activity in the first quarter of 2025, according to the Q1 2025 IPO Trends Report by EY With 62 IPOs raising a total of $2.8 billion, India remains a leading destination for companies seeking to go public, even amidst a backdrop of global market per the EY report, the largest IPO during this period was by Hexaware Technologies Ltd. , which successfully raised USD 1.0 billion, highlighting the ongoing demand for technology-related offerings in the Indian the overall IPO activity in India saw a decline of approximately 20% compared to the previous year, reflecting a cautious investor sentiment as the BSE SENSEX index experienced a slight decrease of 1.1 %Prashant Singhal, Partner and Markets Leader, EY India, stated, "While the impressive IPO proceeds in Q1 2025 highlight the strength of India's capital markets, the record-breaking Mergers and Acquisitions (M&A) market further demonstrates its maturity. Q1 2025 saw all-time high M&A deal volumes with transactions valued at billions of dollars, reflecting strong investor confidence and strategic investments.""This M&A surge, driven by domestic activity and international interest, complements the IPO market, showcasing a healthy and dynamic Indian financial landscape. We anticipate continued momentum in both public and private markets as companies pursue growth," he to the report India secured a 22% share of global IPO activity in the first quarter of 2025, with 62 IPOs raised $2.8 billion, showcasing continued interest from EY report highlights that the IPO landscape in India remains diverse, with significant activity across sectors such as Industrials, Real Estate, Hospitality & Construction, and Health & Life health sector, in particular, recorded notable growth, with a substantial increase in the IPO pipeline. Despite the mixed performance in completed listings, the strong fundamentals of many companies are expected to attract investor dynamic stock market, coupled with favourable economic indicators, continues to bolster investor confidence. The growing participation of retail investors is evident, as the market adapts to shifting dynamics and investor Ranka, Partner and Financial Accounting Advisory Services Leader, Indian member firm of EY Global, commented, "India's IPO market continues to be a beacon of resilience and growth. The strong performance in Q1 2025, despite global uncertainties, highlights the robust fundamentals and investor confidence in our market. We are optimistic that this momentum will carry forward, driven by supportive policies and a dynamic economic environment."The EY report further states that the outlook for India's IPO market in 2025 appears promising, with a healthy pipeline of companies preparing to enter the resilience shown in Q1 2025 sets a positive tone for the remainder of the year, as companies continue to adapt to the evolving market landscape.
Bloomberg
19-02-2025
- Business
- Bloomberg
Indian Electronics Manufacturing Companies Slump In Ongoing Market Rout
Before the trading day starts we bring you a digest of the key news and events that are likely to move markets. Today we look at: Good morning, this is Savio Shetty, an equities reporter in Mumbai. Nifty futures point to a muted start, as most Asian markets trade lower this morning on President Trump's latest tariff threats. Foreign investors snapped up Indian shares worth 48 billion rupees on Tuesday and bulls are hoping for this trend to persist. Meanwhile, Hexaware Technologies Ltd. will begin trading today, marking the country's first billion-dollar IPO this year.
Bloomberg
14-02-2025
- Business
- Bloomberg
Hexaware's $1 Billion India IPO Gets Enough Bids to Go Ahead
Hexaware Technologies Ltd. 's initial public offering, India's first billion-dollar float this year, got enough bids on the final day of share subscriptions for the deal to go ahead after a late surge in orders from large institutions. The offering, which is raising funds for the owner Carlyle Group Inc., drew bids that were about 77% more than the number of available shares as of 2:25 p.m. in Mumbai, according to BSE Ltd.'s website. Carlyle holds 95% stake in the Indian software-services company, and aims to raise as much as 87.5 billion rupees ($1 billion).
