IT companies' margins decline to decade-low of 23.2% in June quarter

Wipro, Tech Mahindra see double-digit decline in net profit

After a big jump in the margins and profits in the quarters immediately after the break-out of the Covid-19 pandemic in March 2020, the export-driven IT services companies are now facing their biggest earnings challenge in more than a decade. The operating or EBITDA (earnings before interest, tax, depreciation and amortisation) margin of the industry declined to more than a decade low of 23.2 per cent in the first quarter of the 2022-23 financial year (Q1FY23) as operating expenses raced ahead of revenue growth or the firms.

The industry operating margins had reached a seven-year high of 28.8 per cent