In FY23, the foreign revenue of IT businesses exceeds the earnings of other manufacturers

According to statistics, the aggregate FX income of listed IT businesses increased by 20.7 percent in FY23 to Rs 5.14 trillion.

Indian IT services firms such as Tata Consultancy Services, Infosys, Wipro, and HCLTech have emerged as the most persistent foreign exchange baggers.

Their combined foreign revenue topped that of listed oil and gas businesses, as well as listed non-oil and gas corporations in other industries, for the first time in 2022–23 (FY23). Pharmaceuticals, autos and auto ancillaries, industrial metals, capital goods, chemicals, textiles, fast-moving consumer products, and consumer durables fall under this group.

The aggregate currency income of listed IT businesses increased 20.7 percent year on year (Y-o-Y) to Rs 5.14 trillion in FY23, while manufacturing companies (excluding IT and oil and gas) decreased 5% to Rs 5.08 trillion. An examination of listed businesses in the Business Standard sample reveals a significant slowdown in manufacturing firms’ currency revenue.

IT services businesses, on the other hand, maintained their export growth pace. According to industry analysts, this is due to a larger downturn in India’s commodities exports, while services exports, notably in IT, remain strong.

According to G Chokkalingam, founder and CEO of Equinomics Research, India’s product exports expanded in the low single digits in FY23, but services exports, notably IT services, grew strongly. 

He expects this tendency to continue into FY24 due to India’s continuous decline in goods exports.

IT businesses’ export income has increased at a compound annual growth rate (CAGR) of 14.6% during the last five years. In comparison, the FX revenue of publicly traded firms across sectors increased at a significantly slower CAGR of 4.8%. As a result, the ratio of IT businesses’ export revenues to firms in other sectors has continuously declined, from 2.39 times in FY09 to 1.26 times in FY22.

Furthermore, in terms of export income, the IT industry beat crude oil refiners such as Reliance Industries and Mangalore Refinery & Petrochemicals (MRPL) in FY23. 

The total FX revenue of oil and gas industries increased by 34.4 percent year on year, hitting Rs 4.6 trillion. However, their CAGR since FY13 has been only 4.2%, much behind the 13.7% CAGR for IT businesses.

With a forex revenue of Rs 3.37 trillion in FY23, Reliance Industries was the largest exporter, followed by Tata Consultancy Services (Rs 1.83 trillion) and Infosys (Rs 1.21 trillion). Wipro (Rs 63,700 crore), MRPL (Rs 45,500 crore), and HCLTech (Rs 40,900 crore) were also among the top earners.

In contrast to crude oil refiners, which are net importers because their forex costs exceed their income, IT businesses’ forex revenue more than doubles their expenses. 

Pharmaceuticals, which includes companies like as Sun Pharmaceuticals, Cipla, and Dr Reddy’s Lab, is the second-largest exporting industry, with a total forex revenue of around Rs 82,500 crore in FY23, followed by the automotive sector, which had a revenue of Rs 71,000 crore.

The findings are based on the standalone yearly finances of 795 businesses from the BSE500, BSE MidCap, and BSE SmallCap indexes, excluding those in the banking, finance, and insurance industries. Data on firms’ forex revenue is only provided on an individual basis.