bengaluru, Aug. 18 -- India's $283-billion information technology (IT) industry appears to be fragmenting into two distinct blocs, one prioritising growth through large deal wins and the other pursuing profitability at a time when artificial intelligence (AI)-led automation and global uncertainty have made clients both demanding and cautious. Two large IT services firms-HCL Technologies Ltd (HCLTech) and Wipro Ltd-and at least two smaller peers-Hexaware Technologies Ltd and Mphasis Ltd-are concentrating on growth at the cost of profitability, underscoring the large deal wins by these companies, analysts said. Last month, HCLTech lowered its full-year operating margin target to 17-18% from its earlier stated 18-19%. Although the management of the country's third-largest IT services firm attributed it to restructuring costs, many analysts believe it reflects the Noida-based company's flexibility in winning more business. "One potential conclusion that the Street may draw is that HCLTech is trading off margins for revenue growth. This perception is reinforced by the downward revision of its Ebit (earnings before interest and taxes) margin guidance band-from 19-20% in FY2022 to 17-18% for FY2026, marking the second cut in four years," said Kotak Institutional Equities analysts Kawaljeet Saluja, Sathishkumar S., and Vamshi Krishna, in a note dated 14 July. Similarly, Bengaluru-based Wipro, which has secured about $8 billion of large deals under chief executive officer (CEO) Srini Palia's one-year stint, has stated that growth remains a priority. "For now, our number one priority would be growth," said Aparna Iyer, chief financial officer of Wipro, during the company's post-earnings call on 17 July. The management attributed this to upfront investments in its deal wins. "But looking forward, our focus is going to be conversion of some of these mega deal wins that we have had, large deal wins that we have had. And some of these large deal wins will come with upfront investment and lower margins, right? So, there are going to be pressures that are going to get created," said Iyer, during the post-earnings analyst call. HCLTech and Wipro's approach is in contrast to Tata Consultancy Services Ltd (TCS), which continues to emphasise that it remains committed to its aspirational profitability band of 26-28% in the long term. TCS ended with 24.3% operating profit margin last year. On 28 July, TCS also announced that it would be cutting 2% of its workforce, or about 12,200 employees, as part of various 'strategic initiatives' being undertaken by the company. This exercise, the country's largest private employer said, was aimed at its middle and senior management. At any IT outsourcer, employees at middle and senior levels come with fatter paychecks, pressuring the company's profitability. According to a Mint report on 28 July, TCS's layoff decision was an attempt by the Mumbai-based company to mitigate the impact of AI on operating margins. Clients are demanding up to 30% price discounts on deals, as AI is reducing cost. India's fifth-largest IT company Tech Mahindra also laid out a plan to boost operating margins when it announced its three-year roadmap in April last year....