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Interim Quarter Analysis Q1FY26 – Mixed Performance with Cross-Currency Tailwind Aiding Growth
Interim Quarter Analysis Q1FY26 – Mixed Performance with Cross-Currency Tailwind Aiding Growth

July 30, 2025

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Performance analysis of the top 6 publicly listed Indian technology companies:

  • TCS, HCLTech, Infosys, Wipro, TechM and LTIMindtree - Accounts for ~32% of Tech Industry Revenues

Summary – Q1FY26

  • Revenues increased by 1.2% q-o-q in Q1FY26, after declining by -1.8% last quarter.
  • Net margins contracted by 30 bps sequentially.
  • Headcount growth picked up by 0.3%, net addition of 4,285 employees
  • Combined deal TCV increased to USD 22.4 Bn, down -7.1% q-o-q
  • Key verticals grew sequentially, largely driven by cross currency tailwind: BFSI (+1.6%), Telecom (+1.4%), Retail (+1.8%), and Manufacturing (+3.1%)
  • Geographically, North America increased by 1.2% q-o-q, while EMEA posted a strong growth of 4.4% sequentially.

Let’s deep dive into each of these metrics

Revenues (In USD terms): +1.2% q-o-q

  • Driven by cross currency tailwind
  • Select companies posted strong revenue growth across Europe.
  • Only TCS and Wipro reported a negative revenue growth in reported currency terms.
  • Companies continue to face slower decision-making, project deferrals and reduced discretionary spending amid global uncertainties.

Cross currency tailwind

Currency

Q4FY25

Q1FY26

Change in bps

USD/INR

86.60

85.58

-118.7

EUR/USD

1.05

1.13

781.6

GBP/USD

1.26

1.33

604.2

JPY/USD

0.01

0.01

550.6

Source: XE rates, Nasscom

This shows that on an average, the USD weakened ~450bps versus this basket of major currencies during the period. This resulted in strong revenue growth in US dollar terms.

Net margins: -30bps q-o-q

  • Impacted by wage hikes, delay in deal ramp ups.
  • Select companies also witnessed the impact of seasonality and lower utilization rate.

Combined deals TCV: USD 22.4 Bn, -7.1% q-o-q

  • Companies witnessed delays in deal closure during the quarter.
  • Increased client caution due to tariffs.
  • Deals pipeline continued to focus on cost optimisation and vendor consolidation

Headcount growth: +0.3% (+4,285 employees sequentially)

  • While majority companies posted a net reduction in headcount, select companies (TCS and Infosys), headcount increased.
  • Headcount reduction across companies is driven by demand environment, strategic shift towards AI and stronger emphasis on upskilling existing employees.
    • TCS - Lateral hiring to be adjusted in line with business needs.
    • HCLTech - Restructuring efforts aimed at enhancing operational agility and margins. Also, hiring is impacted by productivity improvements and limited redeployment opportunities.
    • LTIMindtree: Reduced headcount due to strategic recalibration towards AI and automation, and a focus on upskilling existing employees.
  • Freshers hiring:
    • TCS: Annual fresher hiring target to be reevaluated, despite earlier plans to match FY25 intake of 42k.
    • TechM: Hired 250 freshers basis demand uncertainty.
    • LTIMindtree: On-boarded 1,600+ freshers
    • Infosys:  Plans to hire 20,000 freshers in FY26. 

Verticals: (q-o-q growth)

Cross currency tailwinds led to growth in key verticals

BFSI: +1.6%

  • Remains promising with growth driven by rapid advancements in GenAI adoption.

Telecom: +1.4%

  • Focus on AI and customization is rising to drive 5G use case monetization, while client spending has stabilized for select firms.

Retail: +1.8%

  • Select companies are focusing on better execution, and also contribution from previous large deals.
  • Uncertainty around tariffs continue to impact spending and project delays.

Manufacturing and Hi-Tech: +3.1% q-o-q

  • Hi-Tech segment remains strong while manufacturing remains weak including auto.
  • Clients are investing in initiatives intended to prepare technology infrastructure for future demand.

Geographies: (q-o-q growth)

North America: +1.2%

  • Growth opportunities emerging in select areas, particularly within financial services, while other sector (Including manufacturing and retail) remains challenging.
  • There are instances where companies have witnessed project delays/ramp down, which is causing the growth to be offset.
  • Client caution continues

EMEA: +4.4%

  • Continued to grow with benefits from vendor consolidation deals while the overall deals momentum in the region continues to increase

 

Note: Data set considered across indicators varies depending on the data availability for the respective companies covered in the report, hence they are not comparable

Source: Company financials


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Prajwal Pandey
Research Analyst

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