Indian IT splits into growth seekers & margin defenders

While some firms are prioritizing growth via large deal wins, others are pursuing profitability

- Jas Bardia

India's $283-billion information technology (IT) industry appears to be fragmenting into two distinct blocs, one prioritizing growth through large deal wins and the other pursuing profitability at a time when artificial intelligence (AI)-led automation and global uncertainty have made clients both demanding and cautious.

Two large IT services firms—HCL Technologies Ltd (HCLTech) and Wipro Ltd—and at least two smaller peers—Hexaware Technologies Ltd and Mphasis Ltd—are concentrating on growth at the cost of profitability, underscoring the large deal wins by these companies, analysts said.

Last month, HCLTech lowered its full-year operating margin target to 17-18% from its earlier stated 18-19%. Although the management of the country's third-largest IT services firm attributed it to restructuring costs, many analysts believe it reflects the Noida-based company's flexibility in winning more business.