With most frontline information technology (IT) companies having declared their March quarter results for FY09, the status of the IT sector is becoming clearer by the day. What is apparent is that the global economic crisis continues to cast a long shadow on this sector, and its prospects are likely to remain bleak for the next few quarters.

Q4 scenario

Year-on-year (y-o-y). Both income and net profit (cumulative) of the five IT companies that have declared their Q4 results so far have come down. If you compare Q3 results with those of Q4, y-o-y income growth has declined by nearly 17 percentage points. Net profit has plunged 5.8 percentage points over the same period.

Market bellwether Infosys Technologies posted a respectable growth of 24.5 per cent in income (y-o-y) and 32.7 per cent in net profit in the March FY09 quarter. Net profit margin and operating profit margin too did not fall significantly, given the bleak environment, and stood at 21.3 per cent and 29.1 per cent respectively.

The rupee depreciated by almost 4.6 per cent vis-à-vis the dollar during the January-March period. This decline failed to cushion the impact of declining revenue during Q4.

Quarter-on-quarter (q-o-q). If you make q-o-q comparisons, the impact of the slowdown in Q4 comes across even more starkly — it has been much more than in the previous quarters. Q-o-q income and net profit fell (-)5.3 per cent and (-)4.2 per cent respectively from December to March.

While poor, these results did not come as a surprise to the markets and were by and large in line with expectations.

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