Indian services giants are optimistic about new technologies such as generative AI but are seeing clients pull back on discretionary projects as they aim for fast returns.
Here's a look.
Infosys cuts outlook for fiscal year
Infosys cut its fiscal 2024 outlook and now expects growth of 1% to 3.5% compared to the 4% to 7% outlined in April.
For the first quarter, Infosys reported revenue of $4.62 billion with net profit of $724 million.
Salil Parekh, CEO of Infosys, said some clients have slowed their transformation plans and discretionary work. Financials services, telecom and parts of retail were holding back on plans.
Infosys signed large deals in the first quarter valued at $2.3 billion and 56% of those deals were new. Half of the large deals were from financial services companies.
Parekh said:
"We are delighted that Topaz, our AI and generative AI platform is resonating well with our clients. We are working on 80 generative AI projects for our clients at this time. The work we are doing encompasses large language models for software development, text, document, voice and video. Internally, we have developed generative AI tools using an open-source model for software development. We are working with open source and proprietary generative AI platforms and models.
We see this area of generative AI and Topaz being really transformative for our clients. As we look ahead with our large and mega deal successes and our strengthen in cost efficiency, automation and consolidation we feel confident."
Infosys also said its deal pipeline was strongest in engineering, IoT, supply chain, cloud, ERP and digital.
Wipro: Clients reduce discretionary spend
Wipro reported fiscal first quarter revenue of $2.8 billion, up 6% from a year ago, with net income of $349.8 million.
The company projected second quarter revenue to a decline of 2% to a gain of 1% sequentially.
CEO Thierry Delaporte said clients did gradually cut discretionary spending. He said:
"All around us in almost every industry, we see businesses that have been reducing discretionary spend in response to the weaker macro environment. That's had an impact on our revenues as well."
Wipro in the quarter managed to keep operating margins steady at 16%, 112 basis points better than a year ago. Wipro has improved productivity and managed fixed costs.
Delaporte said:
"We are using generative AI for multiple use cases like enterprise knowledge mining, virtual assistance, content creation, automation software, development life cycle and for synthetic data generation."
Wipro also launched Wipro ai360 to accelerate its AI offerings.
TCS: Clients prioritizing faster ROI
Tata Consultancy Services (TCS) in the first quarter delivered revenue of $7.23 billion, up 6.6% from a year ago, with net income of $1.35 billion.
TCS saw strength in life sciences in healthcare, which was up 10.1% from a year ago, manufacturing, up 9.4%, retail and CPG, up 5.3%, and technology and services, up 4.4%.
According to TCS, customers are prioritizing business critical projects and those with faster returns. Cost optimization, vendor consolidation and integrated operations were key priorities for TCS customers.
Generative AI, digital transformation and co-innovation projects were demand drivers for the future.
At TCS' Innovation Forum in New York in June, executives also homed in on the process of innovation and its design thinking frameworks. TCS walked through its Pace system, which brings together TCS foundational research, clients, innovation frameworks and partnerships with academia, VCs and startups. What stood out to me was the idea that innovation has to be actionable and ultimately scale.
TCS CTO Ananth Krishnan said the company is using the Pace framework and its Pace Port locations to create a "go-to place for breakthrough ideas and do something about it."
In today's economy, the emphasis is on doing something with innovation. Krishnan added that TCS has collaborated with clients on quantum computing, generative AI and sustainability use cases to transform businesses. While CXOs are more interested than ever in new technologies and innovation, they're more excited about making those advances actionable. After all, these companies have to execute.
