IT cos on cloud nine amid rising energy spend

Clean Energy In Focus

- Infosys reported 24.3% growth in energy vertical in Q2

- HCL Tech witnessed 17.6% growth in public services vertical including energy

- Global oil giants ExxonMobil, Chevron, Shell, BP, ConocoPhillips and Total Energy earned $100 bn more in last 2 qtrs over what they earned in entire 2021

Bengaluru: Energy sector has emerged as one of the bright spots for the technology sector as high oil and natural gas prices have prompted large oil firms to invest more into technology.

Also, ongoing Russia-Ukraine war and subsequent disruption of supply to Europe have forced many companies in the European region to speed up investment in green energy like wind and solar power.

Recently concluded second quarter results of Indian IT services companies reflected the rising spend by oil and gas players. Infosys reported 24.3 per cent growth in constant currency term over last year in its energy, utilities, resources and services vertical in July-September quarter. HCL Tech witnessed 17.6 per cent year-on-year growth in its public services vertical that include energy and utilities. Engineering services providers like L&T Technology Services (LTTS) have also benefitted from rising spend on clean energy.

"What I can confirm is that our industrial product growth has actually come from electrification of customers. Secondly, there is an interesting concept of V2X in which vehicle will generate electricity and generate back to the grid. There are also many initiatives being taken in generating electricity from solar energy. Therefore, we see a lot of traction in that space in European region," Amit Chadha, CEO & MD of L&T Technology Services, had told Bizz Buzz recently.

According to experts, windfall gain of oil and gas majors on the back of spike in crude oil prices has also made this space attractive. Most oil and gas majors are reporting huge spurt in their revenue and profits in recent months. United Kingdom's Shell and France's Total Energies reported profits for the first nine months of this year at $59 billion. US oil major ExxonMobil last week reported earnings of $19.7bn in the third quarter (July-September) alone.

Estimates suggest that global oil giants ExxonMobil, Chevron, Shell, BP, ConocoPhillips, and Total Energy earned $100 billion more in the last two quarters over what they earned all of 2021.

Many countries including India have imposed windfall gain tax on oil companies to claw back some of the profits. In the US, the Biden administration is threatening oil firms with such imposition amid the mid-term elections.

"Energy, utility, resources and services segment reported robust and steady growth backed by strong large deal wins. The cost takeout initiatives continue to take momentum in the vertical," Nilanjan Roy, chief financial officer of Infosys, said during the post-earnings conference call.

What I can confirm is that our industrial product growth has actually come from electrification of customers. Secondly, there is an interesting concept of V2X in which vehicle will generate electricity and generate back to the grid. There are also many initiatives being taken in generating electricity from solar energy. Therefore, we see a lot of traction in that space in European region

-Amit Chadha, CEO & MD of L&T Technology Services