Accenture's result and indications for Indian IT:
Global IT services major Accenture plc has improved its operating profit margins in the February ending quarter. It has managed to do sp despite adding a record number of employees. Importantly, the company has raised its operating profit margin guidance for the future.
Accenture upping the full-year guidance to 15-15.1%, helped by the revenue growth and low travel costs. Accenture further said its deal wins in the quarter climbed a staggering 13% on-year to $13 billion. Consulting and outsourcing new bookings were each a record $8.0 billion
Indian IT companies have often mirrored Accenture's performance in
the past. Hence, Indian IT companies are also expected to have a bumper earning season in the March quarter.
Indian IT companies on their part have been on an aggressive hiring spree of late. The number of new deals wins is at a record high. And, companies have strong revenue visibility for the next 3-4 years.
Boost for Indian exporters:
Indian exporters continue to enjoy a good time post-covid. Their current order book has improved by almost 40% compared to the pre-Covid-19 period. There is a higher global demand for engineering goods and chemicals. Low-value lifestyle products such as carpets, handicrafts, ceramic products are also showing positive demand.
Gradual recovery in global trade has a positive impact on the export sector in India. Importantly, labor-intensive sectors are being received well. It is a major positive for the employment generation.
India has always been an import-dependent country. And as the world order restores, it would be difficult for India to maintain the same momentum.
This argument can be further verified from the latest trade deficit data. India’s merchandise exports contracted in February after two successive months of growth. Increasing concerns of a second covid wave can also play a major role in derailing the growth.
Positive economic indicators:
Finance minister Nirmala Sitharaman indicated that there has been a strong uptick in all economic indicators as well as the services sector.
There is enough evidence that supports positivity and economic revival. The FM said that high-frequency indicators such as the purchasing managers’ index (PMI) in manufacturing and services, e-way bills, rail freight, and GST collections
The economic resurgence is also reflected in agencies improving their ratings for India. Earlier this month, the OECD global economic outlook revised India’s GDP growth to 12.6% for FY22. It is the fastest among global markets, from 7.9% projected in December.