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US-based digital transformation services and product engineering company EPAM expects to return to revenue growth in 2025, said Jason Peterson, Chief Financial Officer, SVP and Treasurer at EPAM. Alongside this, the company, whose India headcount is currently over 9,000, has announced plans to increase it to around 10,000 by Q1 of next year.
After experiencing sequential degrowth, revenue in Q2 2024 stood at $1.147 billion and was down 2 per cent year-over-year (YoY) from Q2 2023’s, $1,170.2 billion.
For the full year, EPAM narrows the expected range for revenues to $4.590 billion to $4.625 billion. For the third quarter, the company expects revenues to be in the range of $1.145 billion to $1.155 billion.
Peterson commented, “In Q2, we had solid financial results, but still declining on a year-over-year basis. We said we would see sequential growth between Q2 and Q3, but are going through a period where that might be difficult to achieve. We are beginning to sense a period of stability. In the last year and the early part of this year, there was a slowdown in discretionary or new build. Now, there is a stable demand environment. We’re all looking for signs of clients willing to invest in new transformation programmes.”
He added the company has guided to a 2 per cent y-o-y decline in 2024 and expects to return to revenue growth in 2025. “Lower interest rates are somewhat improving the macroeconomic environment. Most equity analysts would have us in a mid-single-digit range.”
Among the verticals, Consumer Goods, Retail & Travel held the highest share at 22 per cent , followed by financial services at 21.3 per cent .
Advanced engineering capabilities
“The reputation we have globally is a company with advanced engineering capabilities. The type of work we do has historically been new build transformation. When we use this excellence in the product in platform engineering capability, it’s a capability we have in India, and Latin America and was originally developed in Eastern Europe. The market has been somewhat challenging for new build, or what many people would refer to as discretionary. The industry is still talking about somewhat cautious demand for discretionary projects and we’ve struggled with that,” he said.
Approximately 20 per cent of its total head count of 52,650 employees and delivery capability is coming out of India, the CFO said. “We have been investing here because we view India as both an attractive talent market and an attractive market from a revenue and customer standpoint.”
Peterson said that EPAM has invested in industry domain experience and worked hard to penetrate life sciences and healthcare. The company is doing work in the medical device area and has seen growth there.
“Even though demand hasn’t improved that much, we’ve been able to penetrate further,” he said. While most other verticals have shown a degrowth compared to a year ago, the life sciences and healthcare vertical has grown 22.4% YoY. In terms of emerging verticals, which showed a 10.6 per cent y-o-y growth, there was some growth in telecom and energy, he noted.
Among geographies, the Americas occupied the largest revenue share at 60.3 per cent , followed by EMEA at 37.6 per cent and APAC at 2.1 per cent .
“We’re looking to grow in North America. There’s an improving environment in Europe and we’re somewhat encouraged. We’ve continued to grow in India rapidly from a delivery capability. Every quarter this year, we’ve been adding headcount here. At the same time, we feel GCCs are a significant opportunity for us to grow. A mix of business comes from global customers and GCCs, but there’s so much economic vitality in the country. It feels like a thriving business environment and we look to enjoy revenue growth in the region,” the CFO noted.
Srinivas Reddy, Managing Director at EPAM India explained that EPAM entered the Indian market through the acquisition of Alliance Global Services in 2015. At the time, Alliance Global had about 1,000 people in Hyderabad. EPAM India currently has centers in Bengaluru, Hyderabad, Chennai, Pune, and Gurugram.
“Our focus, like in the rest of the EPAM regions, is to build a strong engineering company. We’re not doing BPO, large-scale maintenance support projects, and instead, are helping customers build their products, platforms, areas of cloud, data and so on. We continue to grow on cloud and are hiring consultative people and domain people. Data science has also grown rapidly over the last 12 to 18 months and that’s a high-end engineering skill.”
EPAM India
He added that EPAM India is helping customers build their products, and platforms, and helping them with cloud migrations. Over the last six to eight months, it has started with Gen AI and AI work, helping customers with productivity increase, and, in many cases, helping transform their business.
Earlier this month, EPAM announced it will acquire First Derivative, a Northern Ireland-headquartered managed services and consulting business for the capital markets industry with more than 1,800 employees worldwide and major delivery capability in the U.K., Ireland, North America and APAC.
In September, the company announced yet another acquisition with NEORIS, a Miami-headquartered global advanced technology consultancy with over 4,700 professionals across talent hubs in Latin America, Spain and the US
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Published on October 24, 2024
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