India’s major IT services companies largely maintained or improved operating margins in the July-September quarter, as AI-led productivity measures and tighter cost controls helped offset subdued client spending, pricing pressure and economic uncertainty in key overseas markets.
Tata Consultancy Services (TCS) reported an operating margin of 24%, unchanged from the previous quarter, while Infosys held its margin at 21%. HCLTech’s margin rose 131 basis points sequentially to 18.2%, Tech Mahindra’s increased 40 basis points to 14.8%, and Wipro’s climbed 50 basis points to 16.5% in Q2.
Revenue growth, however, remained modest at some of the largest firms. TCS reported year-on-year constant-currency growth of 2.8%, while Infosys grew 1.5%. Wipro’s IT services revenue was flat sequentially in constant currency and rose 0.6% year on year. HCLTech reported 2.6% year-on-year constant-currency growth, while Tech Mahindra recorded 7.2%.
Companies pointed to automation, operating discipline and improved delivery efficiency as ways to manage costs while investing in new services. HCLTech said its internal AI initiatives helped improve margins, alongside a stronger contribution from advanced AI services. The business generated $219 million in the quarter, up 78% year on year in constant currency.
During its earnings call, HCLTech said it could “very effectively offset the AI-related deflation” while expanding its core services and advanced AI business.
Tech Mahindra also highlighted the role of AI in delivery. Its management said it was “intensifying the use of AI to improve productivity, optimize delivery effort, and strengthen execution economics” across fixed-price and outcome-based programmes.
