Indian IT Giants Face Mixed Q1 Amid Global Uncertainty; AI Offers Hope

Management commentary painted a mixed picture, caution prevailed, yet industry CEOs also emphasised cost optimisation, vendor consolidation, and opportunities in AI makeovers.

An overview of Q1 report cards of Indian IT giants shows year-on-year revenue growth ranging from 0.8 per cent (for Wipro) to 8.1 per cent (HCL Technologies).

Source : Freepik

India's top IT services firms delivered single-digit revenue growth in April-June, capping off a mixed, somewhat-sobering quarter as macroeconomic instability and geopolitical tensions weighed on global tech demand and delayed client decisionmaking.

Management commentary painted a mixed picture, caution prevailed, yet industry CEOs also emphasised cost optimisation, vendor consolidation, and opportunities in AI makeovers.

An overview of Q1 report cards of Indian IT giants shows year-on-year revenue growth ranging from 0.8 per cent (for Wipro) to 8.1 per cent (HCL Technologies).

Axis Securities, while penning its results review on Infosys, noted that overall the business environment remains uncertain due to unresolved tariffs and geopolitical issues, prompting clients to be cautious with discretionary spending, and delaying decision-making.

Nuvama Institutional Equities expects the demand environment to remain challenging for the next one-two quarters due to macro uncertainty.

"However, we remain positive on medium-to-long-term outlook, as technology debt is very high for enterprises, which will warrant revival in spending as macro improves," Nuvama said in its report post-Infosys' results, that concluded the Q1 earnings season for Tier-1 IT services firms.

TCS' revenue rose 1.3 per cent year-on-year to Rs 63,437 crore, while bottomline improved 5.9 per cent to Rs 12,760 crore.

TCS MD and Chief Executive K Krithivasan said the company is experiencing a "demand contraction" due to the continued uncertainities on the macroeconomic and geopolitical fronts, and added that he does not see a double-digit revenue growth in FY26.

Krithivasan explained the delays in decision-making experienced in the preceding quarter have "intensified" now, and hoped for the discretionary spends -- a prime mover of revenue growths for IT companies -- would return once the uncertainities ebb.

For Bengaluru-headquartered Infosys revenue was up 7.5 per cent to Rs 42,279 crore, while net profit at Rs 6,921 crore translated into an 8.6 per cent growth.

Wipro's topline grew 0.77 per cent in Q1 to Rs 22,135 crore but its profit rose at a faster 9.8 per cent clip to Rs 3,336.5 crore.

On a positive note, Infosys secured large deals worth USD 3.8 billion and raised the lower end of its FY26 revenue growth guidance to 1-3 per cent, from 0-3 per cent earlier.

Infosys CEO Salil Parekh, however, expressed caution and said while the economy worldwide has come to more stable situations, "it is not fully settled". Industries such as logistics, consumer products, and manufacturing were impacted by economic changes in the economic environment, the company's management said.

Clients are reportedly highly focused on cost and efficiency, reflecting ongoing caution influenced by the macroeconomic setting.

Wipro CEO and MD Srinivas Pallia said the first quarter of the fiscal faced significant macro uncertainty, which kept the overall demand muted. Wipro's clients prioritised initiatives with immediate impact, focusing on cost optimisation and vendor consolidation. At the same time, they accelerated their AI, data and modernisation programmes.

Pallia also noted that discretionary spend is not uniform and is coming back only in certain pockets.

Wipro's IT services segment, which forms the core of its business, generated Rs 22,080 crore in during the quarter under review, a marginal year-on-year growth of 0.8 per cent and a sequential decline of 1.6 per cent. The company has given a sequential guidance of -1 per cent to 1 per cent in constant currency terms.

HCL Technologies' (HCLTech) revenue was 8.1 per cent higher at Rs 30,349 crore but profit fell 9.7 per cent to Rs 3843 crore year-on-year, hurt by higher expenses and one-time impact of a client bankruptcy.

The Noida-headquartered IT firm, however, raised the lower end of revenue growth outlook for the full fiscal year on booking expectations in the coming quarters.

CEO C Vijayakumar said the June quarter was historically the weakest for the company, although the environment, with some variations, mainly remained stable and did not deteriorate as feared at the start of the quarter.

Tech Mahindra clocked 2.65 per cent revenue growth to Rs 13,351.2 crore, its profit 33.9 per cent higher at Rs 1,140.6 crore. 

(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)