Indian IT giants set for Q3 growth on dollar gains: experts
MUMBAI, INDIA — India’s $254-billion technology outsourcing industry is set for a modest rebound in the December quarter, aided by favorable currency tailwinds. Analysts suggest that the depreciation of the Indian rupee against the US dollar will help mitigate the seasonal slowdown typically seen in Q3.
“Q3 is a seasonally weak quarter. This time the performance will be better because of rupee depreciation,” said Pareekh Jain, founder of consultancy firm EIIR Trend.
However, caution persists as the sector continues to recover from prolonged stagnation caused by conservative IT budgets in key markets like North America and Europe.
IT earnings season to highlight 2025 outlook
The December-quarter earnings season begins on January 9 with Tata Consultancy Services (TCS), followed by HCLTech on January 13, Infosys on January 16, and Wipro and Tech Mahindra on January 17. Analysts will focus on management commentary regarding IT budgets for the calendar year 2025 (CY25) and demand trends across sectors like banking, financial services, and insurance (BFSI), retail, manufacturing, and telecom.
According to Jefferies, aggregate revenue growth for top-tier IT firms is expected to moderate to 0.7% quarter-on-quarter in constant currency terms (QoQ cc).
HCLTech is projected to lead organic revenue growth among large-cap peers at 4.2%, while mid-tier player Coforge may achieve 4.5% QoQ cc growth due to large deal ramp-ups. In contrast, TCS and Wipro are expected to report slight revenue declines.
BFSI recovery vs. manufacturing weakness
Sectoral trends reveal a mixed picture. Growth will likely be driven by recovery in BFSI, while weakness in manufacturing—particularly in the auto sector—could weigh on performance.
Companies like Infosys and HCLTech are expected to revise their FY25 revenue guidance upward, reflecting cautious optimism for future demand recovery.
Margins and forex impact under scrutiny
Margins are anticipated to remain mixed across IT firms. While TCS and HCLTech may see margin expansion due to currency benefits, companies like Wipro could face margin pressure from wage hikes.
Forex headwinds are another factor; Jefferies estimates an 80-100 basis point impact on margins for TCS and HCLTech due to currency fluctuations.
GenAI initiatives and hiring plans in focus
Beyond financial metrics, analysts will track progress on generative AI (GenAI) initiatives as firms invest in emerging technologies to drive growth. Hiring plans will also be critical as IT majors prepare for a potential demand surge in CY25 amid rising competition from global capability centers (GCCs).
Accenture’s recent upward revision of its revenue guidance provides a positive signal for FY26 recovery across the sector. However, much depends on client spending patterns, deal pipelines, and discretionary investments in key geographies like North America and Europe.
