The macroeconomic environment has become increasingly uncertain over the past few months, particularly for Indian IT companies heavily reliant on the U.S — their largest revenue-generating market. The renewed risk of global tariff escalation, especially under the prospect of a Trump-led administration, has heightened concerns over cross-border service continuity and outsourcing viability. This has led to a notable shift in client sentiment, with U.S enterprises becoming more risk-averse in their IT spending decisions.
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DRChoksey Report
The demand environment in Q3 FY25 reflected early signs of stabilization, with slightly improved Total Contract Value momentum, supported by small and mid-sized deal conversions. However, large deal closures remained muted, indicating that enterprises continue to maintain a cautious stance, particularly for discretionary-led digital transformation initiatives. The improvement was not broad-based, and clients showed a preference for short-tenure, costjustified projects over long-term strategic spending.
The macroeconomic environment has become increasingly uncertain over the past few months, particularly for Indian IT companies heavily reliant on the U.S — their largest revenue-generating market.
The renewed risk of global tariff escalation, especially under the prospect of a Trump-led administration, has heightened concerns over cross-border service continuity and outsourcing viability. This has led to a notable shift in client sentiment, with U.S enterprises becoming more risk-averse in their IT spending decisions.
As a result, discretionary tech investments and large-scale transformation projects are being delayed, with client budgets increasingly being reallocated toward non-discretionary priorities such as core operations, automation, and cost optimization.
The overall sentiment reflects a pause in strategic IT spending amid fears of policy instability, trade disruptions, and potential recessionary pressure.
This sentiment was echoed in Accenture's Q2 FY25 commentary, which pointed to continued softness in discretionary spending, deal delays, and cancellations, particularly in the U.S. market. Accenture's revenue guidance revision was primarily driven by headwinds in its federal government vertical, which is undergoing budget tightening.
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