India’s IT sector delivered a disappointing report card for the March quarter, with all major companies missing Street expectations amid weak growth and persistent margin pressure.
Among largecaps, Tata Consultancy Services (TCS) saw revenue growth improve for the third consecutive quarter, but margin performance disappointed investors. Infosys, too, fell short of estimates, reporting a 1.3% decline in constant currency revenue against expectations of a 0.5% growth.
Wipro’s growth remained subdued despite a boost from the Capco and Designit (Harman DTS) integration, while HCL Technologies reported a sharp miss, weighed down by discretionary spending cuts and project cancellations.
On a constant currency basis, TCS posted growth of 1.2%, Wipro grew 0.2%, while Infosys and HCLTech declined 1.3% and 3.3%, respectively.
For FY26, TCS reported a 2.4% decline in revenue, marking its first annual contraction since inception. Wipro’s revenue fell 1.6%, extending its decline for the third straight year.
HCLTech grew 3.9%, but missed its guidance of 4-4.5%, while Infosys reported 3.1% growth, at the lower end of its guided range.
FY27 guidance
Looking ahead, guidance for FY27 remains modest. HCLTech expects revenue growth of 1-4% with EBIT margins of 17.5%-18.5%, while Infosys has guided for 1.5%-3.5% growth with operating margins of 20%-22%.
Wipro’s near-term outlook remains weak, with Q1FY27 guidance at -2% to 0%.
Employee change in FY26
Workforce trends were mixed, with TCS reducing headcount by over 23,000 employees in FY26, while Wipro, HCLTech and Infosys added 8,810, 3,761 and 5,016 employees, respectively.
Management commentary
TCS said that while currency depreciation supported margins by 110 basis points, actual expansion was limited to just 10 basis points, disappointing the Street.
The company also indicated that AI-related revenue is now at an annualised run-rate of $2.3 billion, accounting for about 7.5% of total revenue, and expressed optimism for FY27.
Wipro attributed its weak quarter to delayed ramp-ups and client-specific challenges, while maintaining margin guidance of 17%-17.5%. The company also announced a ₹15,000 crore buyback at ₹250 per share.
HCLTech flagged discretionary spending cuts by two US telecom clients and cancellations of SAP-related projects as key drags, while also pointing to 2%-3% AI-led pricing pressure.
Management indicated that near-term focus will remain on building capabilities, even if it comes at the cost of margin expansion.
Infosys pointed to a strong deal pipeline as a key positive, expressing confidence in FY27 performance. The company also pointed to improving momentum in financial services and steady demand in the energy and utilities segments.
