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IT analysts have been grilling the top CXOs of top-tier companies like TCS, Infosys and Wipro to get a visibility on the terrain in the backdrop of tariffs
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Bloomberg
Even as reciprocal tariffs by US President Donald Trump trigger an economic chaos across the world, IT analysts and investors are trying to weight how these tariffs could impact the bottomlines and margins of IT companies.
IT analysts have been grilling the top CXOs of top-tier companies like TCS, Infosys and Wipro to get a visibility on the terrain in the backdrop of tariffs. K Krithivasan, Chief Executive Officer and Managing Director of TCS, said that the Consumer Business Group saw heightened caution and delays in discretionary projects, especially in the US.
In the recent earnings call, he said that it was driven by the significant drop in consumer sentiment in February, which had preceded changes in global trade and tariffs, creating a domino effect on retail CPG and TTH (travel, transportation, and hospitality) industries.
The impact
There is some impact across the board, but there are some sectors more impacted than others. “For instance, our consumer business, you’re seeing more impact like retail, CPG, airlines, travel hospitality, we see more impact. Similarly, there is an impact in the auto sub segment within manufacturing. But if you take BFSI, by and large the segment is doing okay. There is some softness in insurance,” he said.
Jayesh Sanghrajka, Chief Financial Officer (CFO) of Infosys, tariffs and trade barriers were likely to lead to a subdued spend and delayed decision-making.
“Weakness in auto, especially in Europe continues. We are helping clients in aerospace resolve bottleneck in the supply chain,” he said.
“Retail sector has been impacted by economic uncertainty resulting in lower consumer spending in core markets. Due to recent tariff announcements, client budgets are expected to be tightened and there is increased caution. Decision cycles are getting stretched for discretionary spend and large deals,” he said.
Uncertain economic environment
Srini Pallia, CEO and MD of Wipro Ltd, felt that the economic environment had become uncertain on the back of tariff increases.
“We are seeing this impact not just in the US, but also in Europe. Similarly, these impacts are being seen across sectors, directly or indirectly. But some sectors have been impacted more, like consumer, manufacturing. Within manufacturing, specifically automotive and industrial, are impacted,” he said, responding to a query.
He said the clients in all the industries were taking a lot more cautious approach. “And they’re also doing scenario planning, because they would like to see when this whole thing is settled down, before they start making more business decisions,” he said.
Based on client conversations, large transformation projects are being paused or delayed. Clients with budgets are waiting for certainty about the situation before moving forward.
Pallia said that after the pause for 90 days on the tariffs, there was a little bit of stability over the last two few weeks.
“The impact of tariffs on IT service providers will be a function of their portfolio of offerings and end markets,” Prashant Shukla, vice president, Everest Group, said.
“For instance, in terms of topline and deal pipelines, part of portfolio which is discretionary in nature with exposure to directly impacted industries like manufacturing will suffer much more than, say, an essential, non-discretionary service with industry which is not directly impacted by tariffs, like banking. In short to medium term, cost-optimisation services will see more takers,” he said.
Published on April 28, 2025
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