Indian IT firms face budget constraints as clients tighten purse strings

Infosys Ltd. and Wipro Ltd. are anticipated to commence the Indian earnings season with subdued performances due to tight IT budgets among financial services clients.

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It is likely that Infosys, the second-largest IT services company in the country, experienced modest growth in revenue for the fiscal fourth quarter. On the other hand, Wipro, India’s fourth-largest provider, may report a decrease in sales. Accenture Plc recently revised its revenue forecast downwards, attributing it to a reduction in software spending by major Wall Street firms, which are significant clients for Indian companies. 

With discretionary projects from clients getting delayed, cost cuts should support earnings going ahead, according to Nomura analysts Abhishek Bhandari and Krish Beriwal. Comments on budgets for 2024 and the ramp-up of projects will be tracked closely by investors, they said. For Wipro, the recent resignation of Chief Executive Officer Thierry Delaporte brought uncertainty at a time when investors want to see a turnaround.