Infosys reported $4.94 billion in revenue for the April-June period—up 4.46% from the preceding three months and 4.82% from a year earlier—exceeding the $4.86 billion that analysts polled by Bloomberg had expected on average.
Much of this increase in business was from energy companies, which made up 27% of the company’s incremental revenue of $211 million.
Infosys also raised the lower end of its revenue guidance for 2025-26 to 1-3% in constant currency terms, higher than the flat-3% growth it had projected in April, which was its slowest revenue guidance in at least a decade. Constant currency does not take currency fluctuation into account.
HCL Technologies Ltd, too, recently increased the lower end of its full-year guidance. It now expects revenue growth of 3-5% in constant currency terms for FY26, up from its April projection of 2-5% growth.
For the ongoing second quarter, Wipro Ltd expects either a revenue decline or a growth of up to 1%. Tata Consultancy Services Ltd, India’s largest IT vendor, and Tech Mahindra Ltd do not provide guidance.
Much of the boost in Infosys’s guidance is because of its acquisitions of US-based MRE Consulting and Australian cybersecurity services firm The Missing Link for about $98 million, both of which were announced earlier this year. Revenue from these two acquisitions make up almost 0.4% of the company’s overall revenue growth, according to Infosys’s management.
Macro headwinds
TCS fared the worst among India’s five largest IT services companies in the first quarter with a 0.59% sequential decline in revenue to $7.42 billion—its worst first-quarter performance in 5 years.
HCL Technologies, the country’s third-largest IT outsourcer, ended the June quarter with revenue of $3.55 billion, up 1.34% sequentially, while Tech Mahindra, the fifth-largest, saw its revenue grow 0.97% to $1.56 billion. Fourth-largest Wipro ended with $2.59 billion in revenue, down 0.35% sequentially.
Infosys’s management sounded sanguine on the company’s future.
“With the current outlook, we have seen a lot of the discussion on the economy worldwide having come to more stable situations but still seems that it’s not fully settled,” said Salil Parekh, chief executive of Infosys, during the company’s post-earnings press conference on Wednesday.
Parekh’s view was similar to that of his peers at TCS, Wipro, and Tech Mahindra, which have blamed macroeconomic uncertainties for delayed decision-making and project implementation by customers.
However, HCLTech’s management has said the macroeconomic environment is stable, with some sectoral variations.
Infosys’s operating margins in the first quarter were not much to cheer about. The company reported profitability of 20.8%, down 20 basis points sequentially, making Infosys the third large Indian IT outsourcer to slash its margins. (One basis point is a hundredth of a percentage point.)
HCLTech and Wipro’s operating margins narrowed 160 basis points and 20 basis points to 16.3% and 17.3%, respectively. On the other hand, TCS and Tech Mahindra’s operating margins widened 30 basis points and 60 basis points to 24.5% and 11.1%, respectively.
Infosys’s big wins
Infosys expects growth to pick-up in the next few quarters. Chief financial officer Jayesh Sanghrajka said the company raised the lower end of its full-year projections on the back of a “strong quarter and strong deal wins”.
Parekh said the optimism was based on Infosys securing more consolidation deals from clients, especially in the US, its biggest market.
“We are seeing clients are selecting us more and more when they are looking at consolidation, because inherently, clients see Infosys as delivery, as very strong and stable, and also providing new ideas, especially on AI, for improvements into their business,” said Parekh.
Infosys reported large deal signings worth $3.8 billion in the first quarter, up 46% sequentially.
While TCS has said that it expects IT spending by clients to resume once there is clarity in the market, Tech Mahindra has given mixed signals, its management saying that it is too soon to predict revenue growth or even a recession.
HCLTech and Wipro are optimistic of a better second half in FY26 on the back of recent deal wins and a strong order pipeline.
“Infosys’s Q1FY26 results reflect beat on revenues with a 4.46% (quarter-on-quarter) USD revenue growth with internals suggesting that it (growth) is not aided by any sequential rebound in pass-through revenues,” said Manik Taneja, executive director for IT services at Axis Capital.
However, a point of concern was Infosys’s net profit, which fell 0.49% sequentially to $809 million in the June quarter. Infosys is the fourth large IT outsourcer to report a fall in net profit for the first quarter.
Tough road ahead
Infosys increased its headcount by 210 to end the June quarter with 323,788 employees.
HCLTech cut headcount by 269 people to end the first quarter with 223,151 employees, while Tech Mahindra’s headcount fell by 214 to 148,517 employees. Wipro also reduced headcount in the first quarter, by 114 people to 233,232 employees.
TCS is the only top IT outsourcer in the country to have added headcount during the June quarter, up by 5,090 people to end the period with 613,069 employees.
Three of the country’s five largest IT outsourcers cutting headcount signals a tougher road ahead. More headcount in an IT services company implies more demand for their IT services.
The decrease in headcount comes in the backdrop of a tariff war started by US President Donald Trump coupled with geopolitical uncertainties. These can force large Fortune clients, many of which count Infosys as their IT vendor, to hold their IT spending.
Infosys shares were up 1.26% at $18.49 apiece on the New York Stock Exchange at 6:04 pm IST.
On NSE, before its results were announced, Infosys ended Wednesday down 0.76% at ₹1,558.90 each, while the Nifty IT index gained 0.16%.