The TWILTCH providers (Tech Mahindra, Wipro, Infosys, LTIMindtree, TCS, Cognizant, and HCL) represent the leading India-heritage IT and business service providers. The recent LTI and Mindtree merger sees LTIMindtree join this coveted list of industry titans. To that end, their financial results are often considered a good indicator of how the wider market is performing. We delved into each provider’s financial reports for Q4 2020-2022(1) and found:
- Tech Mahindra: YoY revenue growth of 8.8% in Q4 2022 represents the provider’s first drop below double-digit growth since Q2 2021. While all its industries and geographies continue to post growth, there was a notable slowdown in both Europe (13% to 4%) and the Americas (from 22% to 11%), as well as in the communication, media, and entertainment industry (18% to 6%).
- Wipro: YoY revenue growth has slowed after peaking in Q3 2021 at 29.5% (due to bumping up in BFSI revenues post the Capco acquisition). This quarter, Wipro reported single-digit growth of 6.2% YoY. Among all its industries and geographies, only communications and APMEA reported a decline for the first time in the last 1.5 years, while the rest reported a slowdown.
- Infosys: Its 9.6% revenue growth is the second-highest among the TWILTCH service providers, behind only LTIMindtree. All its industries experienced a slowdown for the last two quarters. The slowest YoY growth was reported for financial services and life sciences, at 2%. Also, there were notable reductions in growth in the US and Europe.
- LTIMindtree: It is the only company with double-digit YoY revenue growth, at 14.0%. However, its pace of growth has dropped compared to the previous quarters. The slower pace is noticed across regions and significantly in the high-tech, media, and entertainment industry.
- TCS: Overall revenue is growing YoY (8.4%) but much slower when Q4 2022 is compared to the last few quarters. There was a YoY decline in growth across industries and geographies, with a steep fall noted in Europe (including the UK) and the BFSI industry.
- Cognizant: It has maintained its revenue across industries and geographies over the past year, without much variation, at around $4.8 billion, with an anemic but consistent 1.3% growth.
- HCLTech: Year-on-year revenue growth dipped from 13.8% in Q4 2021 to 9.0% in Q4 2022. The drop in growth was driven by financial services, technology and services, retail and CPG, and public services. In terms of geography, its growth has slowed in America and the rest of the world (except Europe).
The Bottom Line: Due to the macroeconomic headwinds, enterprises are being cautious and re-evaluating their IT spending, which is slowing the growth of major Indian IT service providers.
- The TWILTCH companies are witnessing a slowdown in their revenue growth, which is a strong indication of a decrease in IT spending from the uptick seen during the pandemic. However, there is a palpable need to drive innovation faster as enterprises recognize that digital is table stakes for survival. Enterprises that can balance the macroeconomic “Slowdown” with the “Big Hurry” to innovate have the maximum potential to succeed.
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