Indian IT Services Firms Post Single-Digit Growth in Q1 Amid Macro Uncertainty

India's top IT services firms, including TCS, Infosys, and Wipro, reported single-digit revenue growth in Q1 due to macroeconomic instability and geopolitical tensions. Management commentary emphasized cost optimization, vendor consolidation, and AI opportunities. Demand environment is expected to remain challenging for the next one-two quarters, but long-term outlook is positive.

India's leading IT services firms, including TCS, Infosys, and Wipro, reported single-digit revenue growth in Q1 due to macroeconomic instability and geopolitical tensions. Management commentary emphasized cost optimization, vendor consolidation, and AI opportunities. Demand environment is expected to remain challenging for the next one-two quarters, but long-term outlook is positive.

TCS, one of India's largest IT services firms, reported a 1.3% year-on-year increase in revenue to Rs 63,437 crore, while its net profit improved by 5.9% to Rs 12,760 crore. However, TCS MD and CEO K Krithivasan expressed caution, stating that the company is experiencing a "demand contraction" due to ongoing uncertainties and that he does not expect double-digit revenue growth in FY26.

Infosys, another major player, saw its revenue grow by 7.5% to Rs 42,279 crore, with a net profit increase of 8.6% to Rs 6,921 crore. Infosys CEO Salil Parekh highlighted the uncertainty in the global economy and the impact on industries such as logistics, consumer products, and manufacturing. The company secured large deals worth $3.8 billion and raised its FY26 revenue growth guidance to 1-3%.

Wipro's topline grew by 0.77% in Q1 to Rs 22,135 crore, while its profit rose by 9.8% to Rs 3,336.5 crore. CEO Srinivas Pallia noted that the first quarter faced significant macro uncertainty, leading to muted demand. Wipro's clients prioritized initiatives with immediate impact, focusing on cost optimization and vendor consolidation, while accelerating their AI and data programs.

HCL Technologies' revenue was 8.1% higher at Rs 30,349 crore, but its profit fell by 9.7% to Rs 3843 crore year-on-year. The company raised its revenue growth outlook for the full fiscal year on booking expectations in the coming quarters.

Tech Mahindra clocked a 2.65% revenue growth to Rs 13,351.2 crore, with its profit rising by 33.9% to Rs 1,140.6 crore.

Analysts expect Infosys to post 6.3% y/y revenue growth in Q1, with a 6% y/y profit rise. Kotak expects the Q1 results to be "as bad as feared" due to the unchanged demand environment, which can protect current FY26 revenue growth assumptions.

The demand environment is expected to remain challenging for the next one-two quarters, but the long-term outlook is positive due to high technology debt among enterprises, which will warrant revival in spending as macroeconomic conditions improve [1].

References:
[1] https://m.economictimes.com/tech/information-tech/indias-top-it-cos-wrap-up-q1-with-single-digit-topline-growth/articleshow/122935350.cms