The Daily Brief What’s Going Wrong with Indian IT?
4 snips
Apr 24, 2025 The Indian IT sector is grappling with significant challenges, experiencing slowed growth despite major deals. AI tariffs and client budget cuts are reshaping the landscape, leading to reduced hiring and delayed projects. The discussion explores the disparate impacts on firms like Wipro and TCS, while highlighting opportunities for innovation amidst rising efficiency demands. Global economic uncertainties further complicate the situation, leaving the industry to navigate through both obstacles and potential advancements.
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Tariffs Cause Indian IT Slowdown
- Indian IT companies like Infosys, Wipro, and TCS face slowing growth and delayed deals despite record contract wins.
- Tariffs on imports raise costs for their American clients, causing budget cuts and delayed IT spending.
AI Cuts Costs But Pressures Prices
- AI improves efficiency by automating coding tasks, reducing operating costs for IT companies.
- Yet clients demand discounts due to AI usage, which may limit revenue growth despite stable profit margins.
IT Firms Prioritize Efficiency Over Growth
- Indian IT firms shift focus from growth to efficiency amid tough conditions.
- They cut new hiring, postpone wage hikes, and increase workforce utilization without widespread layoffs.