Bengaluru: The mantra of achieving more with less is returning to India’s IT industry. Amid stock market turbulence and unpredictable conditions, Indian IT giants are feeling the heat. On Monday, Infosys and HCLTech saw their stock prices dip by nearly 4%, while Cognizant and Accenture fell 4% and 2% during early Nasdaq trading. The primary market for these companies is the US, contributing to over 50% of the industry revenues. However, almost 20% of the IT index has been shaved off this year because of jitters from Trump’s proposed reciprocal tariffs. The companies were banking on a turnaround in discretionary spending, but adverse situations are threatening to prolong that recovery.
According to a research note on Incred Equities, the uncertainty and hesitance to spend would pressure budgets and embolden the initiative of doing more with less. IT vendors must withdraw from existing projects and free up discretionary funds for new initiatives utilizing AI or data activity.
Phil Fersht, CEO of HfS Research in the US, pointed out that American businesses are zeroing in on slashing costs, a trend that will ripple through the global IT and BPO services. “Service providers and consultants must pivot fast, entering crisis-mode discussions with clients to pinpoint where manufacturing or imports with lower tariffs can shift,” he said.
Fersht added that IT firms must pivot from chasing innovation and expansion to emphasizing savvy cost-cutting and workforce adjustments. “Free trade zones are fading. While this won’t hold up against the shifting economic landscape, sharp firms can seize the chance to lock in contracts and streamline client operations,” he noted.
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Peter Bendor-Samuel, founder and chairman of Everest Group, emphasized that tariffs are shaking up the US and global economies, sparking widespread caution and a retreat from investments. “This is hitting discretionary IT spending hard and stunting growth,” he said.
He suggests that zeroing in on cost efficiencies and exploring markets beyond the US could offer better prospects.