India’s top IT firms are grappling with a prolonged period of deal delays and slower ramp-ups as global clients continue to tighten budgets and defer large transformation projects.
While no major project cancellations have been reported, top executives from TCS, Infosys, Wipro, HCLTech, Tech Mahindra, Persistent Systems, and others have acknowledged that recovery may not fully materialise until late FY26—if at all.
Tariff-driven uncertainties and tighter scrutiny of discretionary spending are forcing the deal-making environment to remain cautious. Even with a strong pipeline, the execution is being staggered, and growth trajectories have shifted from acceleration to protection.
At TCS, CEO K Krithivasan was unequivocal in Q4 FY25, stating that while clients are holding back on new discretionary investments, “we have not seen any large cancellations”. Instead, clients are delaying the kick-off of new initiatives and taking longer to approve spending, particularly for digital transformation.
Still, TCS remains relatively optimistic. The company reported an all-time high order book of $39.4 billion and expects FY26 to deliver better revenues than FY25.
Krithivasan noted that there is a strong base of committed deals and the firm is focusing on mining existing accounts and strengthening client relationships to weather the slowdown.
Furthering this, Infosys CEO Salil Parekh also ruled out any cancellations, but flagged delays in ramp-ups for recently won deals. While avoiding direct reference to cancellations, Parekh, in the Q4 FY25 earnings call, acknowledged a “current uncertain environment” and said clients are focusing on consolidation and cost pressures, he said.
The company has given a cautious revenue growth guidance of 0–3% for FY26, reflecting the conservative stance many clients are taking.
Parekh emphasised that cost takeout and consolidation remain a dominant theme in client conversations. Clients want to simplify operations and reduce costs, and he said the new spend is being evaluated under that lens.
Despite the deal wins announced in FY24, Infosys is treading carefully into FY26, and Parekh admitted that visibility into the second half of the year remains murky.
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Programs Are ‘Paused’, Not Scrapped
Among tier-1 IT firms, Wipro has been the most vocal about client caution. CEO Srini Pallia, who took over its leadership in April 2024, pointed out that “large transformation programs are being paused, delayed, or rescheduled.”
One of Wipro’s top clients deferred a key transformation initiative, impacting quarterly numbers. However, Pallia was clear that these are not cancellations, but rather a reflection of client-side uncertainty.
During the Q4 FY25 call, Pallia said that clients are waiting to see how macro factors, including tariffs and inflation, play out before committing to large-scale programs.
Wipro’s Q1 FY26 guidance reflects a sequential revenue decline, and the company signalled that growth in the near term will be subdued. The impact is more visible in the US and European markets, where budget approvals have slowed significantly.
HCLTech, while facing the same global headwinds, has so far managed to shield itself better. CEO C Vijayakumar said the company “hasn’t seen any material impact yet” from global uncertainty or the recent US tariff announcements.
However, he acknowledged that sectors like consumer goods and manufacturing could be affected if conditions worsen. HCLTech is placing its bets on AI-led transformation. Vijayakumar noted that several clients are exploring AI adoption not just for innovation but for cost reduction, which creates “strong growth opportunities emerging.”
The company has guided for 2–5% growth in FY26, suggesting confidence in AI-related and run-the-business deals despite the larger slowdown.
Likewise, Tech Mahindra faced a dip in Q4 FY25 revenue, which CEO Mohit Joshi attributed to a delayed renewal decision by a major hi-tech client. However, the CFO confirmed this, saying the sequential revenue dip was “primarily driven by delay in closure of a renewal deal…in the hi‑tech segment.” This language indicates a delay (not a cancellation) of one big contract. He expects that deal to normalise in the next few months.
The firm is counting on its three-year roadmap to deliver mid-term growth, with automation, AI, and network services as key focus areas. While TechM did not issue a specific FY26 revenue outlook, leadership indicated that FY25 was the trough and FY26 could bring a modest recovery—if large clients resume spending.
The ‘Foot Dragging’
Mid-tier IT firm Persistent Systems highlighted a different issue—client indecisiveness. CEO Sandeep Kalra stated clearly that “we have not seen any cancellations”, but flagged a significant slowdown in deal closures.
Instead, he noted a slowdown: a “certain amount of foot‑dragging” in closing the deals, with customers becoming more hesitant. He described the situation as “fluid” – deals in flight are slower to finalise, though the pipeline remains active.
Kalra stopped short of offering specific revenue guidance for FY26, citing fluid market conditions. However, he reaffirmed the firm’s long-term goal of hitting a $2 billion revenue run rate by FY27. Whether that target holds will depend on how quickly clients regain confidence.
Smaller firms face heightened uncertainty. Sonata Software, WNS, Coforge, and Mphasis have also acknowledged delays, especially in verticals like retail, travel, and logistics. These sectors remain the most vulnerable to discretionary spending cuts.
Sonata, in particular, has seen slower-than-expected growth in its cloud and platform modernisation services. WNS, being more dependent on BPM contracts, has had less exposure to large tech projects, but still warned of “slower volume growth” in Q1 FY26.
Despite this, the smaller firms had a much better quarter and year when compared to their larger counterparts.
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What emerges from this cross-section of India’s IT leadership is a consensus: the crisis is not of demand collapse, but of delay. Budgets haven’t vanished, but they’ve been put on hold.
Clients still want digital transformation and AI, but only after they cut costs, simplify operations, and assess risks from new tariffs or global uncertainty. The shift is also philosophical. Where Indian IT once grew on the back of discretionary tech spend, it is now increasingly being seen as a partner in cost efficiency and business continuity.
That narrative is unlikely to change in FY26.
In short, there is no structural collapse in demand, but neither is there a swift rebound in sight. Indian IT leaders are walking a fine line—reassuring stakeholders that the worst is behind, while quietly acknowledging that FY26 may be another year of low to mid-single-digit growth.
As TCS’s Krithivasan said that the demand is there—it’s just that clients are taking longer to act. The question now is: how long can Indian IT firms continue to grow when clients are stuck in decision limbo?
