Infosys, on Thursday, joined peers Tata Consultancy Services (TCS) and Wipro in highlighting the impact of an uncertain tariff regime that is derailing the tentative recovery in global demand for technology services.
For India’s $280 billion IT services industry, beset by a near two-year slowdown due to macro-economic challenges in the aftermath of the Covid pandemic, this fresh roadblock is leading to flattened growth, slowing profits and a sharp dip in fresh hiring.
The chief executives of all three IT companies cited prevailing volatility from the tariff war as reason some of their clients in markets across United Sates and Europe are pausing existing projects, rethinking fresh spending and turning instead to eking out savings from ongoing engagements.
Baking in the nervousness in the global economy, Infosys guided for a flat full year revenue growth which could increase by a small 3% on the upper end. Its net profit and revenue growth for the final quarter of fiscal year 2025, came below street expectations and the company’s own guided range. “The fact that we gave a three-point guidance reflects there is uncertainty in the environment,” said Salil Parekh, chief executive of Infosys acknowledging the change in the business landscape due to the tariff situation.
Down the line
The focus for the company will be on cost take-out and consolidation deals.
The macroeconomic churn impacted revenues of all three companies resulting in negative-to-marginal growth sequentially. For TCS, fourth quarter revenues were almost flat and grew 0.4% sequentially to Rs 64,479 crore. Wipro said its revenues grew 0.8% to Rs 22,505 crore. Whereas for Infosys, revenue declined by 2.01% to Rs 49,925 crore.
While Infosys guided for a 0-3% growth in full year 2026 revenues, Wipro guided for a 1.5-3.5% fall in revenue in the ongoing first quarter of FY26 in constant currency terms. TCS does not give guidance.
Revenue growth for the full fiscal 2025 for all the three companies also came in low single digits. While for TCS, it stood at 3.8%, for Infosys it was at 3.7% and for Wipro it declined by 2.7%.
"In March, there were uncertainties, including some around deal closures and delays in decision making,” K Krithivasan, CEO of TCS said at a post earnings call last week.
Bengaluru-based Wipro’s chief Srinivas Pallia echoed the sentiment by saying on Wednesday, “Given the uncertainty in the environment, we expect our clients to take a more measured approach going forward, especially on two spend areas: large transformation programs and discretionary spend.”
Post results, Infosys ADRs on the New York Stock Exchange (NYSE) tanked 3%, a similar drop that its smaller rival Wipro saw a day prior. A day after the earnings, Wipro's ADRs recovered around 1% but were trading lower at around 0.5% by noon on Thursday. TCS is not listed on the NYSE.
Hiring drops
ET reported on Thursday, that IT companies are slashing their hiring mandates with demand for talent having dropped by nearly a fifth during January to March 2025 compared to the previous quarter.
The headcount addition by the three companies mirrored this sentiment. While Infosys added just 199 employees during the final quarter, TCS and Wipro added 625 and 614 people respectively for the quarter. The three companies together employ 11.64 lakh people.
On Thursday, Infosys reported a 11.7% drop in net profit for January to March quarter from a year ago to Rs 7,033 crore impacted by expenses on wage hikes, marketing, and seasonal weakness. Sequentially, the net profit grew 3.3%. Revenue declined by 4.2% sequentially and was down 3.5% in constant currency terms even as it rose 7.9% on year to Rs 40,925 crore.
For the full year, large deal wins were lower at $11.6 billion total contract value (TCV) including two mega deals in the last quarter. It bagged $17.7 billion TCV in FY24. Of these, net new deals were 56%, one of the highest we have seen in several years and higher than the previous year.
Total contract value of large deal wins was lower at $11.6 billion for the year from a year ago at $17.7 billion, with 56% net new.
Operating margins continued to be guided in the 20%-22% range.
Parekh of Infosys clarified that most of its deals from the previous quarters are moving “into the appropriate next phases” and did not call out any specific delays in project execution so far even as he underlined that the market is uncertain.
To be sure, all the three executives said that the changes in the economic environment have happened only in the last few days and it will take some time to assess the full impact on the industry and things could improve later in the year.
Both TCS and Wipro have considered delaying the annual wage hikes amid the uncertainty around the macro environment and revival of business demand.
For India’s $280 billion IT services industry, beset by a near two-year slowdown due to macro-economic challenges in the aftermath of the Covid pandemic, this fresh roadblock is leading to flattened growth, slowing profits and a sharp dip in fresh hiring.
The chief executives of all three IT companies cited prevailing volatility from the tariff war as reason some of their clients in markets across United Sates and Europe are pausing existing projects, rethinking fresh spending and turning instead to eking out savings from ongoing engagements.
Baking in the nervousness in the global economy, Infosys guided for a flat full year revenue growth which could increase by a small 3% on the upper end. Its net profit and revenue growth for the final quarter of fiscal year 2025, came below street expectations and the company’s own guided range. “The fact that we gave a three-point guidance reflects there is uncertainty in the environment,” said Salil Parekh, chief executive of Infosys acknowledging the change in the business landscape due to the tariff situation.
Down the line
The focus for the company will be on cost take-out and consolidation deals.
The macroeconomic churn impacted revenues of all three companies resulting in negative-to-marginal growth sequentially. For TCS, fourth quarter revenues were almost flat and grew 0.4% sequentially to Rs 64,479 crore. Wipro said its revenues grew 0.8% to Rs 22,505 crore. Whereas for Infosys, revenue declined by 2.01% to Rs 49,925 crore.
While Infosys guided for a 0-3% growth in full year 2026 revenues, Wipro guided for a 1.5-3.5% fall in revenue in the ongoing first quarter of FY26 in constant currency terms. TCS does not give guidance.
Revenue growth for the full fiscal 2025 for all the three companies also came in low single digits. While for TCS, it stood at 3.8%, for Infosys it was at 3.7% and for Wipro it declined by 2.7%.
"In March, there were uncertainties, including some around deal closures and delays in decision making,” K Krithivasan, CEO of TCS said at a post earnings call last week.
Bengaluru-based Wipro’s chief Srinivas Pallia echoed the sentiment by saying on Wednesday, “Given the uncertainty in the environment, we expect our clients to take a more measured approach going forward, especially on two spend areas: large transformation programs and discretionary spend.”
Post results, Infosys ADRs on the New York Stock Exchange (NYSE) tanked 3%, a similar drop that its smaller rival Wipro saw a day prior. A day after the earnings, Wipro's ADRs recovered around 1% but were trading lower at around 0.5% by noon on Thursday. TCS is not listed on the NYSE.
Hiring drops
ET reported on Thursday, that IT companies are slashing their hiring mandates with demand for talent having dropped by nearly a fifth during January to March 2025 compared to the previous quarter.
The headcount addition by the three companies mirrored this sentiment. While Infosys added just 199 employees during the final quarter, TCS and Wipro added 625 and 614 people respectively for the quarter. The three companies together employ 11.64 lakh people.
On Thursday, Infosys reported a 11.7% drop in net profit for January to March quarter from a year ago to Rs 7,033 crore impacted by expenses on wage hikes, marketing, and seasonal weakness. Sequentially, the net profit grew 3.3%. Revenue declined by 4.2% sequentially and was down 3.5% in constant currency terms even as it rose 7.9% on year to Rs 40,925 crore.
For the full year, large deal wins were lower at $11.6 billion total contract value (TCV) including two mega deals in the last quarter. It bagged $17.7 billion TCV in FY24. Of these, net new deals were 56%, one of the highest we have seen in several years and higher than the previous year.
Total contract value of large deal wins was lower at $11.6 billion for the year from a year ago at $17.7 billion, with 56% net new.
Operating margins continued to be guided in the 20%-22% range.
Parekh of Infosys clarified that most of its deals from the previous quarters are moving “into the appropriate next phases” and did not call out any specific delays in project execution so far even as he underlined that the market is uncertain.
To be sure, all the three executives said that the changes in the economic environment have happened only in the last few days and it will take some time to assess the full impact on the industry and things could improve later in the year.
Both TCS and Wipro have considered delaying the annual wage hikes amid the uncertainty around the macro environment and revival of business demand.
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