The quarterly financial reports of India’s leading IT services companies for Q3 present a mixed bag, with HCL Tech and Infosys leading the pack. This period, traditionally considered weak due to furloughs and holidays, saw companies reporting strong deal momentum, though mega deals remained elusive. While FY24 witnessed flat or declining headcount across the sector, Q3 FY25 marked a shift, with all major players except HCL Tech turning net positive hirers this fiscal year. Management commentary indicated an uptick in discretionary spending by clients in select areas, albeit with cautious optimism.

Revenue Growth and Deals

India’s largest IT company, Tata Consultancy Services (TCS), experienced a choppy third quarter, with dollar-denominated revenue declining by 1.7% sequentially. CEO and MD K. Krithivasan highlighted early signs of revival in discretionary spending within the BFSI and retail sectors. With near-term challenges bottoming out, Krithivasan also foresees medium-term growth in manufacturing, life sciences, and healthcare. Notably, TCS reported a robust total contract value (TCV) of $10.2 billion. Gartner's Senior Principal Analyst, Biswajit Maity, remains optimistic about TCS’s trajectory, urging the company to prioritise service delivery and resource management to address customer concerns.

Infosys and HCL Tech posted dollar revenue growth of 0.9% and 2.6%, respectively, in Q3. Both companies revised their annual constant currency (CC) revenue growth guidance. Infosys increased its forecast for FY25 to 4.5-5%, up from 3.75-4.5%, while HCL Tech revised its guidance to 4.5-5%, up from 3.5-5%. HCL Tech CEO and MD C. Vijayakumar attributed the revision partly to a 50-basis-point contribution from the HPE CTG acquisition, adding, "Services revenue growth is expected to be between 4.5% and 5% year-on-year in constant currency terms."

Wipro and Tech Mahindra (TechM), both having undergone leadership transitions, reported revenue declines. Wipro’s revenue stood at $2.6 billion, a sequential decline of 1.2%, while TechM posted $1.6 billion, down 1.4%. TechM CEO and MD Mohit Joshi cited cross-currency headwinds as a significant factor. However, both companies reported strong deal momentum. Wipro achieved a TCV of $3.5 billion, with its Capco business recording 9% order book growth and 11% revenue growth year-on-year. TechM, meanwhile, secured over 40 new clients in its "must-have" accounts, with six large deals closed this fiscal year.

Nomura analysts remain optimistic about TechM and Wipro. They project TechM’s dollar revenue to grow by 0.4%-9.2% year-on-year in FY25-27F, while Wipro’s revenue is expected to decline by 2.2% in FY25 but grow by 3.3% in FY26.

Hiring and Headcount

After starting FY25 with lower headcounts, major IT companies—barring HCL Tech—reported net additions by Q3 and expressed optimism about FY26 hiring. Infosys added 5,591 employees in Q3, marking its second consecutive quarter of net headcount growth. HCL Tech signalled improved hiring in FY26, while TCS plans to increase campus recruitment next year. Wipro aims to hire 10,000-12,000 campus recruits quarterly, complemented by lateral hiring. In contrast, LTIMindtree maintained a cautious stance, linking hiring plans to market conditions and demand.

Despite these additions, attrition rates rose on a 12-month basis. An earlier report by ICRA noted that moderating demand and higher utilisation of excess manpower hired in FY22 and FY23 had exerted pressure on hiring through FY24 and early FY25. Sachin Alug, CEO of NLB Services, emphasised the growing integration of AI in operations, noting a shift in campus hiring towards professionals skilled in cloud computing, data engineering, and software development.

Cautious Optimism Ahead

The overall outlook remains cautiously positive, with most companies anticipating improved discretionary spending by clients. TCS’s Krithivasan remarked, “Seeing early signs of revival and the strong TCV win gives us more confidence in CY25 and FY26.” A recent Gartner report aligns with this sentiment, projecting worldwide IT spending to grow by 9.8% in 2025, with software and IT services expenditures expected to rise by 14.2% and 9%, respectively.