Wipro, Tech Mahindra outshine TCS, Infosys in weak Q3 for IT

Wipro ended the October-December 2025 period with $2.64 billion in revenue, up 1.19% sequentially and 0.24% from a year ago. More than three-fifths of its incremental revenue came from banks, which make up a little more than a third of its business.

On the other hand, Tech Mahindra reported a third-quarter revenue of $1.61 billion, up 1.5% sequentially, and 2.74% on a yearly basis. This was its best third-quarter performance in three years. Telecom companies, which make up a third of its business, contributed more than half to the company’s growth during the quarter.

On the other hand, Tech Mahindra reported a third-quarter revenue of $1.61 billion, up 1.5% sequentially, and 2.74% on a yearly basis. This was its best third-quarter performance in three years. Telecom companies, which make up a third of its business, contributed more than half to the company’s growth during the quarter.

This wraps earnings for the big boys of Indian IT. HCLTech was the best performer among the top five. Earlier in the week, TCS, Infosys, and HCL Technologies reported $7.51 billion, $5.1 billion, and $3.79 billion in revenue, which is a sequential increase of 0.6%, 0.5%, and 4.1%, respectively.

Wipro and Tech Mahindra, which were the latest to share their earnings, ended the third quarter better-than-expected. Two separate Bloomberg polls expected Wipro and Tech Mahindra to report $2.6 billion and $1.57 billion in the third quarter, respectively.

“Healthy growth coupled with continued margin expansion reinforces confidence in the company (Tech Mahindra) to deliver on its three-year turnaround plan outlined at the end of FY24," said Manik Taneja, executive director for IT services at Axis Capital.

Still, both companies were also more measured in their commentary on the demand environment compared to their larger peers.

“From a demand outlook perspective, like I said, very strong pipeline that we have, and this pipeline is across sectors and across markets. So I don't see any change in that aspect. But discretionary spend is something we are closely watching," said Srinivas Pallia, chief executive officer (CEO) of Wipro, in a post-earnings press conference on Friday.

Pune-based Tech Mahindra voiced a similar perspective.

“Demand environment has certainly strengthened a bit. I won't say that there's a dramatic change or that, you know, we're off the races, but it certainly reflects that the environment is slightly more stable," said Mohit Joshi, CEO of Tech Mahindra, during the company’s post-earnings press conference on Friday.

Tech Mahindra also bagged a deal upwards of $500 million from an unnamed communications provider in Europe, which the management said was its biggest in the continent and would drive its growth. Europe makes up a fourth of its business.

In April last year, TCS, which derives over 94% of its revenue from overseas markets, had said it was “confident" that international business would grow faster in the current fiscal year than in FY25, but in an analyst call on 12 January, CEO K. Krithivasan said this now remains an “aspiration."

However, India's second-largest IT services firm Infosys was slightly more optimistic.

“We are not seeing any deterioration, which is one sign, and we see overall, the macro environment seems to be where people are expecting maybe some interest rate cuts. We'll see if that happens, especially in the US," said Salil Parekh, CEO of Infosys, during the company’s post-earnings analyst call on 14 January.

The company raised its full-year revenue guidance to 3-3.5% in constant currency terms, up from 2-3% in October. Constant currency does not take currency fluctuations into account.

This is still lower than that third-largest HCLTech, which narrowed its guidance to 4-4.5% for FY26, from 3-5% in the preceding quarter.

HCLTech’s CEO, C. Vijayakumar, pointed to persistent uncertainty in the global market that is leading to a slow spending growth. However, “the fundamental demand for technology as a driver for business transformation remains structurally intact," Vijayakumar said during the company’s post-earnings press conference on 12 January.

A better-than-expected performance in the first nine months of the current fiscal year implies Tech Mahindra will reverse the trend of revenue decline and end the fiscal year with revenue growth. For Wipro, which—like Tech Mahindra—ended last year with a revenue decline, it would need a 1.86% sequential dollar revenue growth in the January-March quarter, its best Q4 performance in four years, to avoid a full-year decline.

Wipro’s management expects fourth-quarter revenue between $2.64 billion and $2.69 billion. Still, shareholders were not pleased with Wipro’s performance as its shares on the New York Stock Exchange fell 6% to $2.79 during pre-market hours, as of 7:02 PM India time.

“A weaker-than-expected Q4 outlook would have caused the Wipro shares to fall," said Taneja.

Another bright spot for both companies was their operating margins. Wipro and Tech Mahindra reported operating margins of 17.6% and 13.1%, up 90 basis points and 100 basis points, respectively. In contrast, TCS’s operating margins were flat at 25.2% whereas Infosys’ margins declined 260 basis points to 18.4%. HCLTech was the only company in the top three to end with a margin expansion, that of 110 basis points to 18.6%.

One basis point is one-hundredth of a percentage point.

However, the country’s three largest IT outsourcers faced a greater impact from the labour codes, which hurt profitability of each of the five IT outsourcers.

TCS, Infosys, HCLTech, Wipro, and Tech Mahindra reported upfront costs of $238 million, $143 million, $109 million, $33.3 million, and $30 million, respectively, which implies an impact of up to 320 basis points on their profitability. The labour codes increase basic pay to employees and thereby raise statutory payouts such as provident fund and gratuity.

In terms of artificial intelligence (AI), only two of the top five shared revenue from the new technologies. While TCS reported $1.8 billion in annualised revenue from AI as of December quarter last year, HCLTech reported $146 million from advanced AI in the last quarter.

Still, each of the companies said they expect AI revenues to increase.

“AI continues to be a growth pillar of our strategy. As we support clients in moving from experimentation to execution at scale, we are seeing AI increasingly embedded across large enterprise engagements, driving business experience, process and operations transformations, IT build and change as well as IT operations," Tech Mahindra's Joshi said.

However, the top five IT companies showed a mixed trend in headcount. TCS, HCLTech, and Tech Mahindra reduced headcount by 11,151 employees, 261 employees, and 3,098 employees, respectively, during the quarter. On the other hand, Bengaluru-based Infosys and Wipro added headcount by 5,043 employees and 6,529 employees, respectively.