Big Four of Indian IT lose market share; HCL Tech's outlook offers little relief

HCL Technologies, which reported its Q4 numbers after market hours on Tuesday, has been the fastest growing among the top four for the second consecutive year, and projects the highest growth for FY26 despite a cautious outlook. But this offered little relief.

The IT sector is caught in the crossfire of US President Donald Trump's aggressive reshoring push and initiatives, and the threat of a looming US economic slowdown.

Over the past one year, Indian IT companies have steadily lost ground in the equity market pecking order. The BSE IT index, which once commanded a 9.3% share of the overall market capitalization, has declined to 7.9% in April so far, after peaking at 10.6% in January last year—a clear indication of ebbing investor confidence in the country’s tech sector.

Trump trauma

Following Trump's return in January 2025, IT stocks (BSE IT index) suffered a staggering ₹7 trillion market capitalization loss, a 17.4% decline to ₹33.8 trillion as of 23 April in the early trading hours around 9:30 am. This contrasts sharply with the broader market's 1.6% increase to ₹430.7 trillion. The message is clear: the rules of global trade are shifting violently, and no export-driven segment is entirely safe.

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To be sure, over half of HCL Technologies, Wipro, and Infosys's revenue comes from the US market, with TCS at 57% in Q4FY25. TCS's March quarter revenue growth was lowest in recent years, while Wipro's top line declined for the second straight year in FY25. 

Though, HCL Technologies, which reported its Q4 numbers on Tuesday after market hours, has been the fastest-growing among the top four for the second consecutive year and projects the highest growth for FY26 despite a cautious outlook. That said, all four IT services giants have guided for a slow start to FY26, citing client slowdown in decision-making and project pauses due to the uncertain macroeconomic environment. 

This concern largely arises from macroeconomic uncertainty due to US President Donald Trump’s tariff flip-flops. “Conversion remains a concern amid global economic volatility," noted Utsav Verma, head of institutional equities at Choice Broking. “Delayed client decisions and rising scrutiny on discretionary budgets are impacting sectors such as manufacturing, retail, automotive, and healthcare."

Ajit Mishra, senior vice president – research at Religare Broking, also said, “There’s no official tariff on Indian IT services, but U.S. clients are becoming more cautious. Many are shifting to smaller, outcome-based deals, phasing out large transformation projects. There’s also an increased demand for onsite talent and local delivery, which is squeezing margins."

“Trump’s Make America Great Again initiative prompted stricter trade policies, leading to tariffs on several countries across sectorswhich could result in an economic slowdown of the US economy. This has indirectly impacted discretionary IT spending by US companies," said Verma. “The services sector is likely to be a key focus in Bilateral Trade Agreement (BTA)negotiations between India and the US, as the imposition of tariffs could significantly impact the outlook for Indian IT companies."

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Mishra added, “The correction in IT stocks could plausibly be linked to renewed trade tensions, as markets anticipate a revival of protectionist policies, visa restrictions, and tariffs under the Trump administration. These developments raise concerns about reduced US enterprise spending, tighter H-1B visa norms, increased scrutiny of outsourcing contracts, and potential regulatory changes."

He noted that Trump’s vow to end outsourcing and reform the H-1B system—potentially shifting to a merit-based model—poses serious risks to Indian IT, which heavily relies on U.S. exports and talent mobility.

Value erosion

TCS, Infosys, HCL Technologies, and Wipro have borne the brunt of investor angst, collectively shedding ₹5.5 trillion in market value since the start of the year. Their combined market cap has plunged from ₹30.6 trillion to ₹25 trillion, an 18% drop in less than four months.

Looking ahead, Verma anticipates tepid performance in the first half of FY26. “The ramp-up of recent deal wins has been slower than expected. We estimate FY26 constant currency revenue growth at just 0.7% for Infosys, 4% for TCS, and -2% for Wipro," he said. “Margins, however, may hold steady due to cost optimization and vendor consolidation efforts by U.S. clients."

Cautious optimism

Going forward the sector's growth would likely remain moderate, experts argue. “Topline growth will likely outpace bottom-line gains due to pressures from wage hikes, elevated onsite costs, and sustained investments in AI capabilities. That said, large-cap IT firms like TCS and Infosys are better positioned to weather the storm, thanks to diversified portfolios and stronger client ties."

Experts also outline base and bear case scenarios.

“In our bear and base case, countries might strike favourable trade terms with the US, softening the slowdown and keeping the INR/USD range-bound. Large IT projects may continue, even if discretionary budgets stay constrained," Verma explained.

“If trade negotiations fail, a global recession is possible. Tariffs under the BTA could dent India's IT exports further. Should the rupee breach 85 to the dollar, it would signal deeper structural stress."

Mishra, however, remains cautiously optimistic. “This appears to be a sentiment-led correction rather than a fundamental crisis. The Indian IT sector is still anchored by a strong talent base, global delivery capabilities, and sustained demand for digital transformation. Once global headwinds ease, we expect a meaningful recovery."