India's three largest listed IT services companies have now reported their September-quarter results, and the pattern is a mix of strong artificial intelligence numbers and very slow overall growth. TCS reported total contract value of $9.6 billion, slightly above the $9.5 billion of the previous quarter but below the $10 billion of a year earlier, according to Upstox, and said annualised AI revenue had passed $3.1 billion, over 10 percent of its total. Infosys signed large deals worth $5.2 billion and said AI makes up 10.5 percent of revenue. Wipro's large-deal bookings fell 58.6 percent to $674 million. The results will be read together because the three firms depend on the same clients and the same regions, mainly North America and Europe.
The argument that AI is becoming the sector's growth engine is supported by the figures. Two of the three firms now earn about a tenth of their revenue from AI work, which was a minor line a few years ago. Infosys said AI revenue rose 29 percent from the previous quarter, and TCS reported annualised AI revenue above $3.1 billion. Infosys also reported that 62 percent of its $5.2 billion in large deals was net new, and TCS's $9.6 billion in contract value shows that big clients are still signing long-term agreements. Wipro's chief executive Srini Pallia called AI a long-term driver that will expand the market, and the company has created an AI-native unit.
The argument that the outlook is weak is also on the record. TCS's revenue grew only 0.5 percent from the previous quarter in constant currency, and its contract value was below the figure of a year ago. Infosys cut its full-year guidance to 1-2 percent from 1.5-3 percent. Wipro's IT services revenue was $2,611.5 million, 0.1 percent lower than in the previous quarter and 0.3 percent higher than a year earlier, and it guided to a change of minus 1.5 percent to plus 0.5 percent for the third quarter. Rupee revenue growth of 9 to 11 percent at each company comes mainly from the weaker rupee and not from more work, so profits and dollar earnings are not rising together.
The sector matters because it is India's largest source of services exports and one of its biggest private employers, and its quarterly numbers set the tone for the Nifty IT index and for hiring in the big cities. If AI revenue grows while the old business shrinks, companies will need fewer people for the same output, which has consequences for fresh graduates. A weak dollar-growth outlook also reduces the inflow of foreign exchange at a time when the rupee is under pressure. Infosys's guidance cut and Wipro's cautious third-quarter range of minus 1.5 percent to plus 0.5 percent suggest that the second half will not be much stronger, and the Nifty IT index, which rose about 4 percent on 16 October, shows how quickly sentiment can swing on a single set of results.
AI is lifting the sector's mix of work but not yet its overall growth. The next set of results will show whether the new revenue is large enough to offset the old.
Featured image: The Wipro campus at Electronic City, Bengaluru (file photo). Photo: Ramesh NG from Bangalore, INDIA, CC BY-SA 2.0, via Wikimedia Commons.
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