A man walks past a logo of Tata Consultancy Services (TCS)
Credit: Reuters Photo
Bengaluru: Starting with Tata Consultancy Services (TCS), IT services companies will report their third quarter earnings this week. Despite volatile macro conditions, brokerages expect IT firms to report a decent show in terms of sales.
India’s largest IT services firm TCS and HCLTech will kick off the earnings season on January 12. Infosys and Wipro will post their Q3 earnings on January 14 and 16, respectively. Brokerages expect large-caps IT firms to report quarter-on-quarter constant currency (CC) growth in the range of 0.3-2.3 per cent.
“The seasonally weak quarter will see the impact of furloughs, fewer working days, and cautious discretionary spending weighing on growth, with demand conditions largely unchanged from the previous quarter. Revenue momentum will be driven mainly by existing deal ramp-ups, while new client decision-making remains limited. On the positive side, the quarter is expected to see cross-currency tailwinds due to a weaker rupee,” UnearthInsight CEO and Founder Gaurav Vasu said.
He added that at an industry level, EBIT margins are expected to remain in the 15-16 per cent range, with some pressure from furlough-led utilisation softness and wage hikes, partly offset by cost optimisation efforts.
“From a sector lens, BFSI and healthcare are likely to be relative growth drivers, while manufacturing, telecom, and automotive may continue to lag. Geographically, Europe and APAC are expected to show better momentum, while the US remains soft,” Vasu said.
In the second quarter of this fiscal year, Infosys raised the lower end of FY26 revenue guidance to 2-3 per cent in constant currency from the earlier forecast of 1-3 per cent.
Motilal Oswal in its December 2025 Results Preview said it is expecting seasonal furloughs to weigh on growth in the third quarter.
“We think that the markets are likely to look through this seasonality and instead focus on signals around the demand environment from client budgeting for CY26. Amid macro-tariff uncertainty and a new tech cycle, we believe clients remain cautious on committing incremental spending to large programs. As a result, we expect demand to stay steady, at best marginally incremental, until Jan ’26 as planning cycles reset and budgets firm up,” it said.
According to the brokerage firm, mid-caps are expected to outperform once again with a growth range of -2.5-3.5 per cent. It pointed out that enterprises should gradually move from AI pilots toward scaled deployments as the year progresses, supporting deal pipeline stability, improving TCV (total contract value), and higher activity in application modernisation, data engineering, and AI integration-led work.
It also added that companies are positioning themselves for early AI-led services demand, as early signs of AI strategy formation are emerging, with IT companies investing in AI-led capabilities through acquisitions and partnerships. TCS recently signed an agreement to acquire Coastal Cloud, a Salesforce Summit partner that specialises in Salesforce Consulting for an all-cash consideration of $700 million. The company also acquired 100 per cent stake in ListEngage, a leading Salesforce Summit partner.
Equirus Securities expects top-6 large IT companies to report CC $ sales growth of 0.2 per cent to 2.3 per cent quarter-on-quarter in the third quarter. It expects Infosys to guide for 2.5-3.0 per cent CC growth in US$ sales in FY26E. For HCLTech, it expects to guide for 4.25 per cent to 5.00 per cent CC growth in Services Sales.
Equirus Securities expects material q-o-q jump in large deal TCV for Infosys, given mega deal win announcement in October 2025.