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Introduction
In this Insight, ARC Advisory Group includes the most recent quarterly results for major Indian IT suppliers that publicly report their results. The easing of macroeconomic uncertainty is a positive sign for future growth, potentially leading to increased technology investments, especially in cloud, AI, and automation. While Q3 results can be negatively impacted by seasonal furloughs, the overall trend suggests a more stable economic environment, which can encourage businesses to prioritize efficiency and innovation.
Analysts have noted that CY25 could bring stronger discretionary spending, improved deal pipelines, and possibly better pricing power for IT service providers. This could mean not just steady hiring but also a renewed push for digital transformation projects across industries.
Executive Summary
The IT services sector reported a mixed performance compared to the last year. Indian IT & Services
industry recorded combined quarterly revenue of $23.9 billion and recorded 3 percent year-over-year (YoY) growth as compared to last year.
India’s IT giants have indeed had a varied quarter, reflecting both resilience and ongoing challenges in the sector. TCS and Wipro reduced headcount, while Infosys and HCL Technologies expanded their workforce, possibly anticipating future demand. Some firms may be benefiting from strong demand for cloud and AI-driven solutions, while others could be grappling with margin pressures or geopolitical uncertainties affecting outsourcing strategies.
The sector continues to grapple with global macroeconomic uncertainties, cautious discretionary spending, and evolving AI-driven opportunities.
Despite revenue fluctuations, improved cost structures and disciplined execution seem to be
supporting profitability. That's a strong indicator of operational efficiency across the sector.
TCS maintained EBIT margin, reinforcing its position as the most stable player. Wipro managed a 70- basis point increase, signaling better cost control. Infosys, while facing some pressure, has kept its margins steady. Tech Mahindra’s margin recovery has been particularly noteworthy, driven by strategic cost optimizations.
These trends suggest that while revenue growth may be uneven, companies are taking proactive steps to safeguard their profitability.
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