Muted quarter, steady outlook: What India's top IT firms see ahead in H2FY26

Halfway through FY26, IT companies are now looking for a seasonally weak third quarter owing to furloughs and holiday seasons in their largest markets. Even as macro uncertainties continue to be a headwind, large IT firms in their recent earnings have not indicated any dip in demand, which is a sigh of relief. While there has been a scattering of mega deals here and there, cost optimisation, and vendor consolidation deals are still holding up well.  

Tata Consultancy Services  

During the earnings call, the country’s largest IT services and consulting firm said that it expects the non–India revenue to see better growth during FY26 compared with the previous fiscal, based on client conversations and a strong demand pipeline. CEO and MD K. Krithivasan said that IT services spending was steady with no significant change expected in the near term. While the broader economic uncertainties continue, enterprises are also keeping tight control over their discretionary spending. “In response to economic and demand volatility, clients are consolidating vendors to achieve transformation objectives effectively and efficiently. We are finding success in many such large deals using our differentiated, AI-infused solutions,” he added.

To put things into perspective, in FY25, on the back of the BSNL deal, the company’s India revenue saw a staggering 62.6% year-on-year growth from 5.6% to 8.6% of its revenue, while its largest revenue market, North America, saw a decline of 1.8%. Other markets, such as Europe and the Asia-Pacific, saw mid-single-digit growth.  

Infosys  

For FY26, Bengaluru-headquartered Infosys raised its lower end of the full-year guidance from the earlier 1-3% to 2-3%, while retaining its margin guidance at 20-22%. This, however, does not include its recent acquisition of Telstra. In H1, the company’s revenues grew by 3.3% YoY in constant currency terms, while its profitability dipped 0.2-20.9% YoY.  

Elaborating on the demand environment, the company’s top brass said that in financial services, clients are actively planning modernisation and AI-driven initiatives and see strong momentum in mortgages, capital markets, commercial banking, and wealth management areas.  “While macro uncertainty and volatility are impacting spending, there is also some acceleration in the market sector with the recent reduction in interest rates. Overall pipeline and signing remain strong, which is visible in six large deals signing this quarter,” Salil Parekh, CEO & MD, said during the earnings call. However manufacturing segment continues to face trade and macro uncertainties, which is creating pressure on discretionary spend, specifically in the automotive sector, he added.  

HCL Tech   

HCL Tech, which has been outperforming peers in growth for 2 years in a row, is the most bullish of the lot and has also raised its lower end of IT services revenue to 4-5% in constant currency terms from the earlier 3-5%. It has, however, retained the full-year EBIT margin guidance at the earlier 17-18%. The company, which has now started calling out its AI revenue, now upwards of $100 million a quarter, sees a big demand coming in the modernisation deals.  

HCL Tech also saw its new bookings touch $2.6 billion in Q2 without the contribution from any mega deal.  “While discretionary spending is whatever it is, we are seeing several programmes which are coming up based on legacy modernisation,” said C. Vijayakumar, MD and CEO, adding that such deals are now close to $100 million plus programs.  

Wipro   

Wipro, which, under Srini Pallia, has been looking to shed its lackluster performance over the last few years, saw $4.7 billion in total contract value and 13 large deals signed in Q2. The company, which provides quarterly guidance, expects its IT revenue in Q3 to be in the range of $2.59 billion to $2.64 billion or -0.5% to 1.5% in constant currency terms. 

Even as Wipro has been focussing on doing more business with its top clients, the company expects execution of some of the deals won in the first half during H2. “Our focus right now is to execute some of the deal wins that we have. Also, we have a very robust pipeline for the second half. Our focus is to convert those deals into bookings, which will again translate to revenues going into the future,” said CEO & MD Srini Pallia during the earnings call.   

Tech Mahindra  

At the mid-point of its turnaround, the company registered sequential revenue growth of 1.6% in constant currency terms in Q2. It saw its new net total deal revenue touch $816 million, a 57% YoY from deals in key verticals, including communications, manufacturing, BFSI, retail, transport, and logistics. Even as it aims for new deals to get closer to the billion-dollar mark, MD& CEO Mohit Joshi expressed confidence that the company is getting closer to achieving it now, having delivered $800-plus million for three quarters and a good pipeline.  

It is also watchful of the macro environment, with a focus largely on execution. “We are expecting that the second half of the year will reflect the improved performance based on our strategic actions that we have taken in the first six quarters of the year. Obviously, you have to overlay the seasonality on that, and you have to overlay what happens in the broader economic context. But on the whole, I think we are optimistic that the second half of the year will be better than the first half, which is also good,” Joshi added.