Bengaluru: DXC Technology expects revenue to decline for a ninth straight year, yet the US-based IT services company is keeping its chin up, betting that a sharper focus on artificial intelligence (AI), its biggest markets, and better execution will eventually return it to growth.
Eight years ago, Ashburn-based DXC—which was formed in April 2017 through a merger between Computer Sciences Corp. and the tech services division of Hewlett Packard Enterprise—generated about $25 billion in annual revenue, making it larger than Tata Consultancy Services Ltd (TCS) at the time.
In FY26, its revenue fell to $12.6 billion, only marginally higher than the $10.5 billion reported by Wipro Ltd, India’s fourth-largest IT services company. For FY27, DXC has guided for another 3-5% decline.
The company, which employs about 38,000 people in India—roughly a third of its global workforce—is attempting to reverse years of decline as enterprise customers shift spending toward cloud, automation and AI.
Against this backdrop, DXC’s management on Tuesday outlined a turnaround strategy at a media briefing held alongside the inauguration of a new office in Bengaluru.
A top company executive said the plan rests on three priorities: expanding sales of the company’s AI platforms, deepening its presence in industries where it already has a strong foothold, and improving execution in IT services.
“Creating a platform-based services business, where we are extremely strong, is one part (of the growth driver),” Ramnath Venkataraman, president of consulting & engineering services at DXC Technologies, said at the media briefing on Tuesday.
DXC is also seeking to deepen its AI capabilities through partnerships. “Pick a specific set of partner ecosystems including new-age partnerships like what you've seen with Anthropic. That’s changing the (growth) trajectory with the mindset of driving platform-based services growth and brings us in pole position,” added Venkataraman.
Last month, the company announced a partnership with Anthropic through which DXC uses Anthropic’s Claude AI to build its AI products and speed up internal work. In return, DXC helps Anthropic sell and deploy Claude to large companies and governments.
The second priority is winning more business from governments, banks and aerospace firms, which according to experts, bring DXC about half of its full-year revenue.
The company does not disclose revenue from specific verticals, but only from service offerings. About 50% of its revenue comes from IT services, cloud and cybersecurity, 40% from engineering and consulting services, and the remaining 10% from insurance software and services.
The third pillar is improving execution. “We’re also changing the go-to-market muscle. It is a very good execution muscle, the go-to-market and the growth muscle is something that we’ve absolutely brought in,” Venkataraman said.
The focus on execution comes after a decade in which DXC’s traditional IT services business shrank sharply. Revenue from that segment has roughly halved over the period, while the company also divested three businesses that together contributed more than $4.5 billion in annual revenue.
Separately, the company is looking to improve operating margins by replacing humans with AI agents. The management is eyeing cost savings of up to $1.5 billion as part of this initiative. Last year, its operating margins fell 20 basis points to 7.7%. It expects margins of up to 7% this fiscal.
DXC’s management has acknowledged that its prolonged revenue decline stems largely from its exposure to declining businesses.
“It’s important to recognize what has occurred in the past. So for a period of time, too much of our offering portfolio, our skill base and our sales focus were aligned to parts of the market that were structurally declining,” said Rob Del Bene, the company’s chief financial officer, during his address at the company’s investor day on 11 June.
Bene added that market transitions over the past few years—such as the shift to cloud, rise of automation and software products — hurt growth.
“That market transition created persistent headwinds to our top line. Revenues have declined and prior customer terminations related to these shifts continue to affect reported performance well beyond the point when those initial decisions were made. So our historical revenue trend is largely, not entirely but largely, the result of a changing technology landscape and us being overexposed to the parts of the market that were shrinking,” added Bene.
At least one analyst posed questions on its execution despite giving a thumbs-up to its strategy.
“We think DXC is attempting to better re-position away from declining market segments towards more growth-oriented segments. However, we remain on the sidelines as we await evidence that DXC is successfully executing against strategic ambitions, particularly given unclear monetization of new solutions that generate meaningful efficiency gains,” said Keith Bachman, IT analyst at BMO Capital Markets, in a note dated 15 June.
Investors, too, do not seem convinced—the company’s shares have fallen 32% since the start of the year on the New York Stock Exchange.