Top clients keep Indian IT afloat amid AI uncertainties

Revenue from the top 10 accounts grew 6.92% for Infosys Ltd, 0.32% for Wipro Ltd, and 1.58% over the previous year for Tech Mahindra Ltd in the nine months ended September, outpacing their overall growth, according to Mint’s analysis of their financials. The overall revenue of Infosys and Tech Mahindra grew 2.77% and 1.21%, while it declined 0.94% for Wipro during the period.

The top five IT services companies get at least a fifth of their revenue from their 10 largest accounts, according to the companies’ disclosures. Faster growth from such clients helped these companies when the generative AI-driven transition is cutting into the revenue of India's $283-billion IT sector.

“Infosys, Wipro and Tech M have all prioritized these accounts, invested more in sales and account management and are reaping the benefits from this prioritization and investments," said Peter Bendor-Samuel, founder of Dallas-based tech research firm, Everest Group.

HCLTech, whose top 10 accounts grew 1.12%, was an outlier as its overall revenue grew faster at 3.14%. Still, the Noida-based company grew the fastest of the five largest IT companies in the September quarter and also in FY25. This suggests broad-based growth and lower reliance on top accounts.

"This indicates that HCL’s growth is coming from new logos and mid-tier clients rather than incremental expansion within existing large relationships," said Phil Fersht, chief executive of HFS Research. “It suggests the firm is diversifying revenue and winning new business outside its traditional big accounts, potentially improving portfolio balance and reducing dependency risk."

Tata Consultancy Services Ltd does not share revenue from top accounts. None of the companies discloses business from individual clients, but JP Morgan and Microsoft are counted among the top customers.

Vendor concentration

Analysts say big Fortune companies are reducing the number of IT vendors they work with to cut costs and are awarding larger, more valuable contract deals to their existing IT vendors.

“We are seeing firms preparing for AI investments by seeking to cut costs from their existing IT budgets. This is driving a renewed focus on portfolio consolidation, where companies eliminate the smaller (IT) vendors and give the work to the large incumbent vendors," said Bendor-Samuel. ‘Thus, those firms focused on the large clients and winning this work are growing faster than the general market."

However, the top accounts grow at a faster clip in the nine months through September 2024: 9.7%, 14.5%, and 11.9% for Infosys, HCLTech, and Wipro, respectively. Their overall revenue grew at a slower rate of 4.95%, 0.88%, and 0.15%, respectively, during the period. Tech Mahindra was the outlier last year, as revenue from its top 10 accounts fell 2.9%, even as overall business grew 1%.

The trend mirrors uncertain demand and the deflationary impact of artificial intelligence on the IT services sector.

“These strategic clients are expanding existing contracts to include cloud modernization, data platforms, and AI-driven process re-engineering. Meanwhile, smaller clients remain cautious amid tighter budgets and delayed decision-making. The result is a deepening concentration of growth within the largest accounts, reflecting a clear “big get bigger" trend across the Indian IT landscape," said Phil Fersht, chief executive of HFS Research.

The resilience of India’s IT industry in 2025 rests heavily on these strategic accounts. “They are helping firms stay afloat amid muted overall demand, but they also mask structural weakness in the long tail of smaller clients."

According to Ramkumar Ramamoorthy, partner at Catalincs, a tech growth advisory firm, these numbers indicate that IT services companies have truly transitioned from being a vendor to a partner to a trusted advisor, helping clients successfully navigate multiple waves of structural changes in technology and business.

“By making investments in a broader canvas of services—across consulting, technology and business operations—and expanding their global footprint, these IT companies have become embedded into the clients’ transformation and innovation agendas, resulting in significantly higher annual revenue and enhanced client stickiness."

Slowing growth

Infosys, HCLTech, Wipro, and Tech Mahindra ended the July-September 2025 period with $5.08 billion, $3.64 billion, $2.6 billion, and $1.59 billion, up 2.73%, 2.79%, 0.65%, and 1.41% from the preceding quarter, respectively. Company CEOs acknowledged macro uncertainties as the sector grapples with a prolonged delay in demand recovery.

India’s five largest IT services companies reported revenue growth of 15-25% in FY22. Three years later, the same companies reported less than a third of this growth, with two of them even reporting a full-year revenue decline.

"We also believe that AI/Gen AI will lead to compression of revenue for the industry in the next 24-36 months as companies self-cannibalize to hold on to their existing clients," Girish Pai, head of equity research for Bank of Baroda Capital Markets, wrote in a note dated 26 July.

IT services companies are taking a hit on revenue as they pass on productivity gains to clients. Fewer employees are billed because of AI-led productivity, as automation tools reduce the need for humans to perform tasks that can be automated. AI primarily automates and reduces the need for human intervention in coding, customer support, and application maintenance roles.

This is leading companies to renegotiate their existing contracts with IT service vendors, shifting from fixed-price contracts to those that are more outcome-based.

However, automation is not the only reason causing a slowdown in revenue.

Uncertain environment

Uncertain tariff policies in their largest market, the US, and global geopolitical tensions that prompt clients to review their supply chains and offset those losses, before allocating more money to IT spending.

“At times when there are no new transformation-driven projects in the market and when the spending is more ‘business as usual,’ clients tend to award more work to existing vendors," said Pramod Gubbi, founder of Marcellus Investment Managers. “Only when discretionary growth-oriented IT spending goes up, you realise that clients are willing to try out new IT vendors because they possess capabilities their existing vendors may not. However, this has not been the case for the past few quarters."

While chief executives maintain that productivity gains will be redeployed into new spending, but investors are not buying it.

Since the start of the year, shares of TCS, Infosys, HCLTech, Wipro, and Tech Mahindra have fallen 27%, 22%, 20.3%, 21.2%, and 17.4%, respectively.