New Delhi, April 21 -- Last week, three domestic IT majors-Tata Consultancy Services (TCS), Infosys, and Wipro - reported mixed Q4FY25 results, impacted by global economic slowdown, demand uncertainty, and potential US tariffs. Despite these challenges, artificial intelligence (AI) dominated tech earnings calls, signalling a shift from AI hype to strategic core investments.
The earnings indicate that that Indian IT firms are transitioning from AI hype to strategic core, moving beyond marketing-driven initiatives to significant investments in AI talent, domain-specific solutions, and client innovation, especially in banking, financial services and insurance (BFSI), healthcare, and retail. Agentic AI is also gaining traction. Key deal wins this quarter were driven by substantial AI investments followed by cybersecurity and cloud.
TCS reported a 1.69% YoY profit decline (Rs.12,224 crore) but a 5.29% YoY revenue increase (Rs.64,479 crore). The growth was driven by AI adoption, integrating AI into 580 business engagements and developing 150+ Agentic AI solutions. FY25 saw AI-driven software engineering advancements and increased demand for AI/GenAI solutions.
TCS secured NVIDIA's Rising Star award, enhanced WisdomNext2.0 with agentic capabilities, and partnered with Google Cloud to boost AI/GenAI offerings. TCS achieved a record-breaking Q4 TCV of $12.2 billion, contributing to a total FY25 TCV of $39.4 billion, primarily fuelled by GenAI and AI-for-IT programs.
Infosys reported a profit of Rs.7,033 crore (down 11.7%) and revenue of Rs.40,925 crore (up 7.9%). CEO and MD Salil Parekh said, "Our depth in AI, cloud and digital and strength in cost efficiency, automation, and consolidation position us well for the needs of our clients."
Read more: Infosys Q4 profit down 12%; CEO banks on AI for growth
The quarter also saw Infosys acquiring Australian cybersecurity firm The Missing Link for AUD 98 million to bolster its cybersecurity and cloud service offerings. It also extended its collaboration with LKQ Europe and partnered with SUSE to create AI solutions based on Infosys Topaz.
Furthermore, Wipro's Q4 profit rose 25.93% YoY to Rs.3569.60 crore, with revenue up 1.33% YoY to Rs.22,504.20 crore. Gartner noted nearly flat Q4 growth but saw positive signs from a strong deal pipeline and AI-led digital transformation. CEO Srini Pallia highlighted strong client response to Wipro's AI-powered solutions. AI is now part of all deal conversations. Wipro secured $5.4 billion in large deal bookings for the year, a 17.5% YoY increase.
Notably, Wipro secured a $650 million contract from Phoenix Group to modernise its platform using AI and cloud. Other deals involved streamlining technology infrastructure for a North American financial institution, modernising a US-based card services provider's payments platform, extending engagement with an American energy major, and enhancing ticket resolution for a North American parcel delivery firm using AI.
Read more: Wipro Q4 Results: Firm underscores large deal wins, IT consulting and AI focus
However, the overall performance turned out to be tepid in Q4 with analysts expressing concern over cautious FY26 guidance. Wipro projected a revenue decline of (-)3.5% to (-)1.5% sequentially, while Infosys narrowed its FY26 revenue growth guidance to 0-3%. The industry anticipates a return to double-digit growth in FY2025-26, driven only by digital transformation and Generative AI, which analysts and providers - both see as a key catalyst.
Despite these uncertainties, they believe AI appears to be a growth driver for the Indian IT sector, which grew at 5.1% in FY24. Market research firm Crisil predicted 6-8% growth in FY26, driven by AI and automation. IT services companies are expected to record healthy deal wins with increasing focus on AI and GenAI, Crisil said in a report published in March. Consulting firm EY India also expects GenAI integration to boost Indian IT industry's productivity by 43% to 45% over the next five years.
Published by HT Digital Content Services with permission from TechCircle.