Top software companies to see net profit decline in December quarter

According to analysts, top Indian software companies may see a 3.7-per cent dip in sequential net profit for the third quarter ended 31December due to salary hikes, marginal increase in selling expenses and appreciation of the Indian rupee vis-à-vis major currencies.

However, on a year-on-year basis, the companies would likely post a 9.7 per cent increase in net profit on an overall improvement in demand for IT services as compared to the same year ago period, they say.

Analysts say that earnings growth usually slows down in the October-December quarter, as billing falls due to fewer billing days on account of the holidays in the period.

Infosys and TCS are expected to see their net profit shrink 4.4 per cent and 5.5 per cent sequentially, Wipro and HCL Technologies will likely see profits decline record a 2.3 per cent and 1.8 per cent decline respectively.

However both Infosys and Wipro -will likely surpass their guidance for the quarter, on account of increasing offshoring volumes from business integration and transformation work coming from mergers and acquisitions, analysts say. Infosys and Wipro are the only two Indian software companies the provide guidance.

Meanwhile, Mahindra Satyam is reportedly on a hiring spree looking to larger rivals for top notch professionals, as it attempts to win back clients. It has even started offering pay hikes of up to 20 per cent according to LiveMint reports.