The profitability of IT services companies declined during the first quarter of FY 2020, on account higher employee expenses especially onsite led by fresh hiring, sub-contracting cost and cross currency movements, according to credit rating agency, ICRA.
The share of fixed price contract improved to 58.5% Q1FY2020 compared to 57.5% in FY2018 while employee utilization levels remained flattish during the same period for sample companies, the agency noted.
“During Q1FY2020, ICRA sample companies grew by 10.3% in INR terms while in US$ terms it grew by approximately 7.4%. During the quarter INR depreciated by 3.7% Y-o-Y versus US$ and appreciated 1.9% and 2.1% versus GBP/EUR respectively, “said ICRA.
You might also be interested to read: TCS To Take Over 1,300 GM India Engineering Unit’s Staff
Employee expense increased to 61.7% in in the quarter from 59.8% in Q1 FY 2019 for ICRA’s sample of 13 companies. The operating margin during the quarter remained at 22.6% versus 23.3% in Q1FY2018 and 22.7% in Q4FY2019, it said.
Source: Economic Times