India’s Big Five IT firms were looking forward to rebound. Now all bets are off.-OxBig News Network

The first quarter of the financial year provides a platform for companies to both showcase the previous year’s performance and make projections for the next 12 months, offering analysts and investors a sense of what to expect.

Each of India’s top five IT services companies had expected to end 2024-25 on a better note than in FY24 on the back of improving demand for tech services and increasing demand visibility.

But amidst Trump’s tariff war, analysts say India’s top IT companies should either defer providing annual growth guidance for 2025-26 or at least be conservative in their projections.

Although Trump’s contentious tariffs do not directly target India’s $283 billion IT services sector, which earns a majority of its revenues from the US, his retaliatory action has created additional uncertainty in terms of tech spending for some of the world’s largest companies.

“As the policy decision-making in the US is asymmetrical, there will be many moving parts that will decide the next steps by governments. Therefore, the visibility for boards on market dynamics is extremely low,” said Thomas Reuner, principal analyst at PAC, a Paris-headquartered IT advisory firm. “Against this background, PAC does not expect organizations to hold back guidance but to settle on an extremely cautious outlook.”

Analysts at Kotak Institutional Equity voiced a similar opinion.

“The focus will be on the annual guidance of the likes of Infosys and HCLT (HCL Technologies),” said Kotak’s Kawaljeet Saluja, Sathishkumar S., and Vamshi Krishna, in a note dated 4 March. “Companies might prefer a conservative stance given higher uncertainty in the near term and the lack of mega deal-driven revenues in FY2026.”

The alternative, Kotak’s analysts said, would be to defer guidance. “It may be prudent on the part of companies to defer guidance (for FY26) until there is more certainty on the demand environment or restrict guidance to the next quarter, where there is a higher degree of visibility,” they said in their note.

While Infosys Ltd, HCL Technologies Ltd, and Wipro Ltd typically provide revenue guidance for the full financial year, Tata Consultancy Services Ltd and Tech Mahindra Ltd do not.

Also read | A cloud of uncertainty hangs over the Big Five of India’s IT industry

‘All bets are off’

Trump imposed a range of import tariffs on at least 60 countries to boost American manufacturing. This is expected to make it tougher for US companies to source equipment and run their businesses smoothly.

This, in turn, could force such US companies to hold back spending on technology, potentially putting the brakes on large transformation projects that bring a chunk of revenue to India’s IT outsourcers.

US companies account for half, or between $3 billion and $16 billion in revenue, for Indian IT’s Big Five.

Trump’s retaliatory tariffs could also result in higher prices across the board and delay lending rate cuts by banks across the world, keeping costs high for businesses to put money into tech projects.

Also read | How Trump world poses trouble for India’s tech firms

“Given that the market likes certainty, the top five would be better off giving a conservative guidance rather than not giving guidance at all,” said Pramod Gubbi, founder of Marcellus Investment Managers.

“Clearly, the tariffs are going to cause a lot of macro pain in the near-term for the US economy and also the global economy. The guidance planned out by the IT service providers would have factored in some sort of improvement in discretionary spending but if the US GDP is at risk, all bets on discretionary (IT) spending are off,” said Gubbi.

A palpable nervousness

At least three brokerages—Kotak Institutional Equities, JM Financial, and Motilal Oswal Financial Services—had lowered their FY26 growth forecasts for India’s top five IT outsources ahead of Trump’s tariffs announcement.

“At best, the top five will give a conservative stance, but at worst, they might defer it like they did during covid,” said Abhishek Pathak, lead analyst for IT services at Motilal Oswal.

A day after Trump announced an additional 27% tariff on India’s exports to the US (recalibrated to 26% later), the Nifty IT index reflected the nervousness in India’s IT sector, sinking 3.58% to 33,511.40 points, while the benchmark Nifty 50 gauge ended Friday down 1.49%.

TCS, India’s largest IT services company, has lost 7% on NSE since Trump unveiled his tariffs on 2 April (3 April, Thursday morning, in India). Infosys, HCLTech, Wipro, and Tech Mahindra shares were down 4.97%, 6.57%, 5.92%, and 5.13%, respectively, from 3 April until Friday’s close.

Over the past three days, the uncertainty regarding the US tariff announcements erased ₹81,220 crore in market capitalisation for India’s Big Five IT outsourcers.

Also read | How IT’s bigwigs made it even bigger after covid

For the just-concluded financial year, TCS should be able to log a revenue growth of 4.6% even without factoring in the fourth quarter. Infosys and HCLTech are expected to have grown 5% at best in constant currency terms in FY25.

Wipro’s management has hinted at a revenue decline of 1% to a growth of 1% for FY25 in constant currency terms, which would be better than its 4.4% decline in FY24.

TCS will kick-start the earnings season on 10 April followed by Wipro on 16 April. Infosys is scheduled to announce its fourth-quarter and full-year results on the following day, and HCLTech on 22 April, followed by Tech Mahindra two days later.

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