The fiscal fourth quarter earnings season has kicked off, and major players in the IT services sector, including Tata Consultancy Services (TCS), Wipro, and Infosys, have unveiled their Q4 results. Analysts have expressed concerns regarding the cautious outlook of these firms for FY26, particularly in light of ongoing global uncertainties. This mixed performance reflects significant challenges such as a slowdown in global growth, persistent demand volatility, and apprehensions surrounding U.S. tariffs.

Challenging Market Conditions Impacting IT Giants

Recent speculation from brokerages hinted at a lackluster Q4 performance. JM Financial commented, “The heightened uncertainty—both regulatory and economic—suggests that actual results could fall short. We’ve seen instances of project slowdowns throughout the quarter. Therefore, we anticipate these companies will end up in the lower range of their guidance. Overall, we project a quarter-on-quarter growth of just -1.4% to 0.2% for large-cap firms, while mid-cap firms may perform slightly better with an expected growth of 0.6% to 3.3%.”

Infosys’ Earnings Overview

On April 17, Infosys reported a profit of ₹7,033 crore, marking a decrease of 11.75% from ₹7,969 crore in the same quarter last year. The company’s revenue from operations reached ₹40,925 crore, up 7.92% compared to ₹37,923 crore in FY24. Biswajit Maity, a Senior Principal Analyst at Gartner, highlighted that Infosys achieved 4.2% year-over-year growth in constant currency during Q4. He noted, “Global economic challenges and geopolitical tensions have adversely affected revenue growth across many IT firms, leading to anticipated subdued earnings. Nevertheless, certain factors indicate a positive outlook for Infosys moving forward.”

Elara Capital remarked that Infosys’ sequential revenue saw a notable decline of 3.5% in constant currency and 4.2% in USD, primarily due to the deferral of billing for third-party software and a drop in volume.

Wipro’s Financial Highlights

Wipro announced its Q4 results on April 16, reporting a profit of ₹3,569.60 crore, which represented a 25.93% increase from ₹2,834.60 crore in the same quarter the previous year. The company’s revenue for the quarter was ₹22,504.20 crore, reflecting a 1.33% year-on-year growth. ICICI Securities attributed the revenue impact to project ramp-downs, volume declines, and pauses in significant transformation programs.

According to Maity, Wipro’s Q4 growth was nearly flat at 0.8% in constant currency, significantly affected by weak discretionary spending and persistent global economic uncertainty. However, there are encouraging signs of future performance, driven by a robust deal pipeline and improvements in critical sectors like BFSI and healthcare.

TCS’ Q4 Performance

TCS released its Q4FY25 results on April 10, showing a profit of ₹12,224 crore, a 1.69% decrease compared to ₹12,434 crore in the same quarter of FY24. The company reported revenue from operations of ₹64,479 crore, which was up 5.29% year-on-year. Elara Securities noted that TCS experienced a -1% revenue decline due to ongoing weaknesses in discretionary spending and client program pauses.

Despite these global challenges, Maity stated that TCS maintained a steady deal pipeline, with expectations for a gradual return to double-digit growth by 2025. He emphasized that while immediate concerns exist, the long-term outlook for Indian IT providers remains optimistic.

Comparative Insights of Major IT Firms

Here’s a quick comparison of the performance and projections of TCS, Wipro, and Infosys:

FY26 Guidance

• Wipro: Anticipates revenue from its IT Services segment to range between $2,505 million and $2,557 million, indicating a sequential decline of -3.5% to -1.5% in constant currency. JM Financial noted concerns over discretionary spending and pauses in large transformational programs.

• Infosys: Revised its FY26 revenue growth forecast in constant currency to 0-3%, down from 4.5-5% projected earlier. It also adjusted its operating margin guidance to 20-22% for the current financial year, reflecting cautious client IT budgets.

Deal Wins

• TCS: Achieved a total contract value (TCV) of $39.4 billion for FY25 and $12.2 billion for Q4, indicating strong deal momentum, particularly in North America and BFSI sectors.

• Wipro: Reported a 48.5% year-on-year increase in large deal bookings for Q4FY25, totaling $1,763 million in constant currency. The overall bookings for the quarter reached $3,955 million, a 13.4% sequential increase.

• Infosys: Secured $2.6 billion in large deal wins during Q4, bringing its total TCV for the fiscal year to $11.6 billion, with a significant portion comprising new contracts.

Employee Dynamics and Attrition Rates

• TCS: The attrition rate stood at 13.3% for the past twelve months, with a headcount increase to 607,979 in Q4 FY25.

• Wipro: Reported voluntary attrition of 15.0%, with total employees at 233,346, reflecting a slight increase.

• Infosys: Noted an attrition rate of 14.1%, up from 12.6% the previous year, while increasing its workforce to 3.24 lakh employees in Q4 FY25.

Dividend Announcements

• TCS: Declared a final dividend of ₹30 per equity share, to be paid within five days after the 30th Annual General Meeting.

• Wipro: Confirmed that the interim dividend announced earlier will serve as the final dividend for FY24-25.

• Infosys: Proposed a final dividend of ₹22 per equity share for the financial year ended March 31, 2025, representing a 13.2% increase over the previous year.

Conclusion

The earnings reports from TCS, Wipro, and Infosys reflect a landscape shaped by global economic uncertainties. While there are notable challenges, each firm also showcases areas of resilience and potential growth. As IT services adapt to these changing dynamics, stakeholders remain hopeful for a rebound in the sector’s performance in the near future.