BENGALURU: Zensar Technologies Ltd is set to get less business from Cisco Systems, one of its top five clients, as the US technology major pares the number of IT vendors it works with and tightens discretionary spending, people with knowledge of the matter said.
The development makes Zensar the fifth Indian information technology (IT) services company in the past year to face pressure in a top account, underscoring a broader trend of global clients rationalizing vendors and cutting costs, moves that are weighing on growth prospects for mid-tier IT outsourcers.
Peers including Hexaware Technologies Ltd, Mphasis Ltd, LTIMindtree Ltd, and Sonata Software Ltd have all lost business from their largest clients over the last year.
According to two people with knowledge of the matter, Zensar is expected to get less business from managing back-end IT work of Cisco. Mint could not independently ascertain the amount of business lost from the client and whether it will continue to lose share. Emails sent to Zensar on Sunday, and to Cisco on Monday remained unanswered till press time.
The Pune-based IT outsourcer, part of the RPG Group, gets about $40 million a year from Cisco. This makes up roughly 6% of its total business, according to one of the two people, who added that the company’s revenue from Cisco has been declining. Lower revenue from one of its largest clients could slow Zensar’s journey towards its aspirational $1 billion revenue goal.
Zensar reported revenue of $160.5 million in the October-December quarter (Q3FY26), down 1.4% sequentially. Much of the weakness came from telecom, media, and technology (TMT) companies, which make up about a fifth of the company’s total business. The company ended last fiscal with $624.5 million in revenue, up 5.4% year-on-year.
At least one brokerage attributed the decline in the TMT vertical to the company’s top client.
“Excluding TMT (which was down 8.7% q-o-q (quarter-on-quarter) in CC (constant currency) terms in 3Q due to higher furloughs esp. in the top client), qoq growth in rest of the business was also soft at 0.3% q-o-q in 3Q,” said Equirus Securities analysts Sandeep Shah and Deep Modi, in a note dated 24 January.
This weakness is attributed to Cisco reducing the number of IT vendors it works with.
“What appears to be happening is this is forming part of a broader Cisco-led vendor rationalization and spend discipline effort. Cisco is tightening discretionary spend, reducing lower-value staff augmentation work, and prioritizing fewer vendors that can deliver higher-value, outcome-oriented programs, particularly around AI, cloud, and platform modernization,” said Phil Fersht, chief executive of HFS Research.
San Jose-based Cisco ended last fiscal with $56.7 billion in revenue, up 5% year-on-year. The company makes network routers, switches, and develops software for cybersecurity and video calls.
Industry echoes
Zensar’s situation mirrors challenges faced by other Indian IT services companies, particularly mid-sized IT outsourcers earning between $1 billion and $5 billion in total revenue.
Sonata Software, the latest entrant to Indian IT’s billion-dollar club, is expected to get lesser business from Microsoft, one of its five largest clients. Mint had reported in July last year that Microsoft’s decision to sell its software licences to clients directly rather than using a third party would hurt Sonata, which gets about 42% of its revenue from selling Microsoft software licences.
Microsoft has also trimmed its business with sixth-largest LTIMindtree, as the rise in automation has prompted the company to outsource less IT management work to Indian vendors.
In June 2025, Mint had reported that cost-cutting drives at US-based mortgage company Federal National Mortgage Association (Fannie Mae) would hack off 1% of tenth-largest Hexaware Technologies’ annual revenue of $1.43 billion.
Around the same time, eighth-largest Mphasis Ltd lost its FedEx account, which accounted for 8% of its $1.61 billion revenue and was its third-largest client. The logistics company had selected Accenture Plc to do much of its IT work.
But pressure is slowly spreading to larger players. Second-largest Infosys Ltd is expected to lose about $150 million in annual revenue from German auto major Daimler starting next year.
Zensar outlook
For Zensar, pressure in a top account, coupled with challenges across the TMT vertical, has rattled management, which is now eyeing growth beyond the segment.
“There is no point in saying TMT, TMT, TMT. I mean, let's get beyond it now. And now the proportion of TMT to the overall mix has come down from the past. So that is what we want to look forward and look ahead. Not on the basis of – and still deliver, try and deliver growth, despite whatever happens in TMT,” said Manish Tandon, chief executive of Zensar Technologies, in response to a question on the challenges in its top account during the company’s post-earnings analyst call on 23 January.
The management attributed the decline in revenue to clients shifting spends to automation-related hardware from traditional IT services.
“As for TMT, I mean, my commentary has been consistent. That we are seeing a lot of spend moving away from services to AI (artificial intelligence), capital investment towards AI, particularly in buying hardware, et cetera. So I am not looking at TMT improving significantly,” said Tandon, who took over as CEO in December 2022.
Technology, telecom, and media companies made up a little more than a third of Zensar’s revenue almost four years ago. Today, they account for less than a fifth.
Brokerages remain cautious on the company as growth has emerged as an immediate concern. Zensar has ended two of the last five years with a full-year revenue decline.
“When the current CEO stepped in, he aspired ZENT (Zensar Technologies) to move up one quadrant a year at a time from a revenue growth standpoint to the leaders quadrant in year 4 (FY27). FY24 being the first year, it was at the bottom most quadrant—on revenue growth—but focused on getting margins to peer matching levels. That happened rather quickly in FY24,” said Bank of Baroda Capital Markets analysts Girish Pai and Lopa Notaria, in a note dated 24 January.
The analysts said the company would need to build its capabilities to increase chances of growing better than peers.
“Getting into the leader’s quadrant by FY27 would require buildup of both sales and delivery muscle and significant capabilities in efficiency-based projects. ZENT is yet to generate confidence in us to get to the leader’s quadrant in growth by FY27 (which will largely be dominated by better performing tier-II companies),” said the note from Bank of Baroda Capital Markets.
Lower revenue from its top accounts could further complicate Tandon’s effort to steer Zensar toward its aspirational $1 billion revenue target and into the industry’s top growth quadrant by FY27.