Infosys and Wipro say that enterprises are pulling back on large projects amid an uncertain economy and tariffs, but are still looking to artificial intelligence to cut costs and automate operations.
The results from the two Indian outsourcing giants aren't surprising given Accenture also cited uncertainty even those its quarter results were fine. Accenture has a large US government business.
Infosys reported fourth quarter revenue of $4.73 billion, up 4.8% from a year ago, with net income of $813 million. For fiscal 2025, Infosys reported net income of $3.16 billion on revenue of $19.28 billion, up 3.6% from a year ago.
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The earnings from Infosys landed along with two acquisition announcements. Infosys said it would acquire Australian cybersecurity services company The Missing Link, and energy consulting company MRE Consulting. The company also said that Mitsubishi Heavy Industries would join its HIPUS joint venture in Japan.
But the issue for Infosys was its fiscal 2026 outlook, which projected flat revenue growth to 3% in constant currency.
On a conference call, Infosys CEO Salil Parekh said customers are cutting back amid uncertainty. "The changes that we have seen in the economic environment impact has happened very recently and over a short span," he said.
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CFO Jayesh Sanghrajka said financial services and manufacturing budgets were solid--especially with AI--but retail, auto and industrial manufacturing budgets were weak. "Recent challenges in terms of tariffs, market uncertainties and trade buyers are likely to lead to a subdued spend and delayed decision-making," said Sanghrajka. "Client budgets are expected to be tightened and there is increased caution. Decision cycles are getting stretched for discretionary spend and larger deals. Exiting FY '25, global uncertainties relating to tariffs and impact of debt on client sentiments and spend are taking center stage."
Sanghrajka noted that the company's outlook will be reassessed based on the economic environment.
Nevertheless, Infosys customers are upbeat about AI. Clients are "moving from a use case-based approach to an AI-led transformational approach with AI agents playing a critical role," said Parekh, who noted AI wins in financial services and manufacturing.
"Across geos, there is increased focus on AI cloud, asset modernization, cost takeout and investing in core tech capabilities," said Sanghrajka. Infosys has said that customers are seeing productivity gains ranging from 20% to 40%.
Parekh said the company is aligning around taking costs out for customers. "Learning from the past, we typically see that this sort of an environment will provide more cost takeout opportunities," he said. "Consolidation and automation lead. We have also pivoted our sales activities into focusing and building more proactive pitches to clients on that area."
Wipro
Wipro reported fourth quarter revenue of $2.63 billion, down 1.3% from a year ago, with profit of $420 million. For fiscal 2025, Wipro reported profit of $2.05 billion on revenue of $10.43 billion.
As for the outlook, Wipro projected second quarter revenue to be $2.5 billion to $2.58 billion, or down 3.5% to 1.5% sequentially.
On a conference call, CEO Srinivas Pallia said customers were pulling back on big projects. He said:
"The global industry environment remained uncertain for most of the year and the recent tariff announcements have only added to that. I have been speaking to clients across sectors to understand how things are playing out on the ground. Even though the underlying demand for tech reinvention remains strong, clients are approaching it more cautiously. In fact, they are focused on cost, speed and AI-led efficiency, and that's exactly where we are leading it."
Pallia added that AI is part of every deal conversation and the focus is productivity and efficiency. He added that clients are going to "take a more measured approach going forward, especially on large transformation programs and discretionary spending."
According to Pallia, Wipro's fourth quarter started well, but sentiment gradually turned negative due to tariffs and their impact.
He explained:
"This has definitely impacted our revenue growth momentum across sectors and markets. We were doing a large SAP program, which was very critical for the client, and this was in the consumer sector. When the client heard about the tariff situation, they put the whole program on pause, not because they don't want to do the program, but they wanted to understand, get the certainties of the tariff situation."
In Europe, clients have also slowed down transformation projects. These customers are reassessing timelines and delaying projects.
Pallia was asked about the outlook for the full year and the Wipro CEO noted that visibility was murky.
"With the recent developments, especially the macroeconomic situation, the tariff situation, we are keeping a very close watch on how the situation is evolving and how our clients are responding," he said. "At this stage our quarter of guidance represents the best visibility we have and definitely we will share all the updates coming quarters as we get clarity on the situation."
