After several quarters of muted performance, large IT services companies showed the first signs of stabilisation during the July-September quarter. Project deferrals that had plagued the industry began to ease, client decision-making improved marginally, and deal execution picked up pace. While demand remains far from buoyant, the quarter marked a steadying of sentiment across the sector as firms leaned on operational discipline, cost-optimisation deals and early traction in AI-led transformation programmes.
For the big four — Tata Consultancy Services (TCS), Infosys, HCLTech and Wipro — sequential growth returned across the board, reflecting the gradual normalisation of client budgets and resumption of previously stalled projects. The management commentary was consistent in tone that the environment is stable but constrained, with clients continuing to prioritise efficiency over discretionary spending. The overall message, however, was one of cautious optimism.
The quarter also reinforced a key shift underway in the global technology services landscape. With macroeconomic uncertainty persisting, companies are increasingly investing in AI-driven productivity and automation rather than large transformation initiatives. This pivot has begun to benefit IT firms, which are now embedding generative AI, data analytics and cloud modernisation into existing service lines to sustain growth. At the same time, margin management and efficient resource utilisation remain critical levers as topline acceleration continues to be gradual.
Within this broad recovery, Infosys stood out as the best performer. The company outpaced peers in both revenue and profit growth, underscoring the benefits of consistent deal execution and disciplined margin management. In constant currency terms, HCLTech led the pack with 2.4% sequential growth, followed by Infosys at 2.2%, TCS at 0.8% and Wipro at 0.3%.
Infosys’ strong momentum in AI-linked projects and cost-efficiency programmes strengthened its position as the relative outperformer in an otherwise cautious market.
It reported a 5.2% sequential rise in revenue to 44,490 crore and a 6.4% increase in net profit to7,364 crore, both ahead of analyst estimates. Operating margin improved by 50 basis points to 21%, supported by better utilisation and cost controls. The company raised the lower end of its constant currency growth guidance for the full year to 2%, while maintaining its upper range at 3% and margin guidance at 20-22%.
TCS, the largest IT firm by revenue, also turned in a steady quarter after a soft start to the fiscal. Revenues rose 3.7% sequentially to 65,799 crore, aided by faster project ramp-ups and improved execution across key accounts. Margins expanded by 70 bps to 25.8%, while net profit fell 5.4% to12,075 crore owing to a one-time restructuring charge. Excluding that, profit grew slightly and exceeded market expectations.
Total contract value rose to $10 billion, up from $9.4 billion in the previous quarter, and the company announced plans to enter the data centre business through a sovereign AI initiative, signalling confidence in longer-term digital infrastructure opportunities.
HCLTech, meanwhile, reported a 5.2% sequential increase in revenue to 31,942 crore and a 10.2% rise in net profit to4,235 crore, with margins improving to 20.5%. HCLTech remains the only IT major to disclose AI revenue separately, and the management reaffirmed its FY26 constant currency growth guidance of 3.5-5.5%.
Wipro also managed a modest rebound with revenue rising 2.5% sequentially to 22,697 crore. However, profit declined 2.5% to3,246 crore. Large deal bookings touched $4.7 billion, including $2.9 billion in new contracts, as vendor consolidation and cost-optimisation trends continued to drive business.
Across verticals, financial services, manufacturing and hiigh-tech led growth, supported by automation and digital engineering demand. Consumer and healthcare segments remained under pressure, weighed by ongoing portfolio rationalisation and subdued discretionary spending. Regionally, North America returned to mild year-on-year growth after several weak quarters, while Europe remained mixed with continental Europe showing marginal recovery, but the UK continuing to lag due to delayed project starts. Growth markets such as India and the Middle East saw strong double-digit gains, driven by public sector and infrastructure projects.
Despite the improvement in operational performance, the management across the board remains guarded. Client budgets are stabilising but not expanding meaningfully, and spending remains heavily concentrated on efficiency and AI-led transformation rather than new initiatives. Analysts said that with deal pipelines strengthening and execution becoming more predictable, the sector is poised for a more steady second half. However, they added that the recovery remains fragile, and the pace of improvement will depend on how quickly committed deals translate into realised revenues.