For some Indian IT companies, entering the healthcare sector has proven to be a boon, boosting revenues at a time when other sectors were facing huge pressure.
Persistent Systems Ltd, a Tier 2 IT company with the highest revenue contribution from healthcare, has recorded an impressive average year-on-year growth of 51% over the past four quarters, according to a Motilal Oswal Financial Services report dated December 18. . In particular, resistance in the tech sector was offset by increased traction in the healthcare sector due to the acceleration of large deals.
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For HCL Technologies Ltd, the contribution of the healthcare sector in the Tier-1 category is somewhat inconsistent. The segment’s revenue decreased by 4% QoQ in the first quarter of FY2025, but recovered with an increase of approximately 3% in the second quarter of FY2025. Wipro Ltd, on the other hand, has performed well in this sector, achieving a compound annual growth rate (CAGR) of around 8.5% in the last two years as per the Motilal Oswal report.
A reassuring note is that unlike the banking, financial services and insurance (BFSI) sector, the healthcare industry remains relatively insulated from interest rate fluctuations. Additionally, IT spending by healthcare customers is expected to remain stable due to continued investments in biotechnology and clinical trials. In contrast, the BFSI sector is focusing on large-scale transformation projects to tackle lagging discretionary IT spending.
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However, potential changes to U.S. healthcare policy under newly elected President Donald Trump could disrupt the healthcare industry and pose a risk to these IT companies’ earnings prospects. . Key uncertainties include the potential repeal of the Affordable Care Act, changes in Medicaid funding, and stricter drug pricing regulations. If these issues are not clarified, the performance of the healthcare industry may suffer in the short term.
