A strong show by Tata Consultancy Services (TCS) in the September quarter—which beat estimates on revenue, margins and deal wins—has revived optimism across the IT sector, with analysts seeing early signs of a recovery in technology spending through the second half of the year. However, brokerages remain cautious on how much of TCS’s momentum would flow through to its peers.
Analysts view TCS performance and commentary as a potential turning point for the industry, suggesting that large deal activity and vendor consolidation could drive incremental growth. “We expect demand in H2FY26 to be better than H1FY26,” analysts from CLSA said, highlighting broad-based growth across markets, though Continental Europe was marked a concern.
For Infosys and HCLTech, the analyst read-through from TCS Q2 performance is moderately positive. Both companies could benefit from a firmer spending environment and the tailwind of vendor consolidation, though growth is likely to stay gradual, they said. HCLTech, with its infrastructure and cloud exposure, may find itself well positioned if enterprise tech investments pick up in the second half, experts added.
Wipro and Tech Mahindra could, however, face a tougher road. Analysts flag ongoing execution challenges and client-specific headwinds that could delay any meaningful rebound. Jefferies analysts also noted that TCS’s 3% sequential headcount decline does not bode well for sector hiring trends, implying that peers will likely remain conservative on workforce expansion until demand visibility strengthens.
While TCS’s aggressive stance on AI — from AI-led restructuring to data centre investments — has positioned it as the most forward-leaning among large IT players, brokerages are divided on whether others can follow suit.
“TCS is showing clear signs of aggression with proactive decisions around restructuring its workforce to make it AI ready, being more acquisitive in future, and plans to create 1 GW of data centre capacity,” analysts at CLSA noted.
The firm’s more assertive tone — marked by a 1 GW data centre investment plan, workforce restructuring for AI readiness, and openness to acquisitions — has set it apart in a sector still marked by client caution.
HSBC analysts added that the company’s AI capacity expansion was “a positive step that reinforces its relationship with hyperscalers”.
The company’s shift towards higher capital intensity and integrated solutions is seen as a long-term differentiator, but one that few rivals are currently prepared to emulate.
Analysts at Nomura added that the strategic gap between TCS and its peers is likely to widen, as the company accelerates investments in emerging technologies and builds deeper integration across services.