Key commentary to watch will be: Client budgeting and spend outlook for CY25 amid change in U.S administration, Explicit Guidance from major IT firms (we are forecasting mid-point guidance for Infosys (3%), HCL Tech (4%), L&T Technology (14%), KPIT (13%)), and Readiness against changes led by AI.
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Dolat Capital Report
The commentary around Indian IT Services for FY25 indicates an expected gradual improvement in growth metrics and reducing uncertainty; however, the fresh rounds of macro and trade instability, trumpeted by tariffs, are likely to increase caution on tech spending in FY26E.
While our interaction with the management and industry participants does not suggest any immediate alarms (Accenture retained guidance and just cautioned on public vertical spends in its Q2 earnings), however, IT vendors have selectively noticed slower ramping off existing deals with an intention to slow down spends.
Additionally, economists have started factoring impact on the economy due to a potential increase in inflation and impact on consumption and US GDP.
On top of this, consistent optimization and improved productivity in AI would mean that the project value would contract, thereby impacting total contract value/annual contract value in renewal deals. Consequently, it is reasonable to anticipate that IT vendors will remain conservative to capture the potential risks ahead.
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Also Read: Capital Goods Q4 Results Preview: Awaiting A Broad-Based Activity Revival — Motilal Oswal
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