Cost cutting by Elon Musk’s DOGE may ‘ache’ TCS, Infosys, Wipro and other Big Indian IT companies as nicely; caution analysts

India’s IT companies, already struggling this 12 months, face a probably extended restoration, with analysts suggesting fiscal 2026 may not convey the anticipated upturn, in response to a report in Reuters. This pessimistic outlook follows Accenture’s latest quarterly report, which highlighted persistent weak point in discretionary spending and general demand. The Indian IT index has declined by 15.3% this 12 months, on monitor for its worst quarter since June 2022, with main companies like TCS, Wipro, Infosys, and HCLTech experiencing losses starting from 11.2% to 18.1%, Reuters reported.

Accenture turns into first ‘tech casuality’

Accenture, a world IT companies big and a key indicator for the Indian IT trade, reported “constrained” discretionary venture spending and an absence of great shopper funds will increase. Accenture CEO Julie Spellman Sweet attributed a few of the slowdown to the Trump administration’s “Department of Government Efficiency” initiatives. “Federal represented approximately 8% of our global revenue and 16% of our Americas revenue in FY 2024. As you know, the new administration has a clear goal to run the federal government more efficiently. During this process, many new procurement actions have slowed, which is negatively impacting our sales and revenue,” Sweet acknowledged throughout a name with Wall Street analysts.

Global commerce tensions to delay restoration

The report additionally highlighted that escalating international commerce tensions, pushed by new U.S. tariffs, have heightened considerations a few slowdown within the United States, a essential marketplace for Indian IT companies. “Whatever has happened in the last two months has created a higher level of uncertainty in terms of how the first half of fiscal 2026 will pan out and what impact it will have on the FY26 recovery rate,” Amit Chandra, deputy vice chairman at HDFC Securities, informed Reuters.
Kotak Institutional Equities analysts, as cited by Reuters report, predict that “softening demand recovery and weak mega deal flow in fiscal 2025 will result in lower incremental revenue from mega deals in fiscal 2026 for Indian Tier-1 IT. Companies will also face net headwinds from early stages of gen AI adoption.”
Chandra, quoted within the report, famous that whereas sectors like banking, monetary companies, and insurance coverage (BFSI) and healthcare had proven indicators of restoration, latest uncertainties have led purchasers throughout numerous sectors to undertake a “wait-and-watch mode,” probably curbing their spending.

Indian IT has restricted publicity, however

Citi Research, in response to Reuters, estimates that IT companies inside its protection may see income progress of 4% in fiscal 2026, mirroring fiscal 2025. Citi analysts, as quoted, acknowledged that “Indian IT has limited exposure,” they cautioned that this might “increase competitive intensity in other segments.”