Tech Mahindra reported a 6.7% profit increase for the June quarter, marking its strongest growth in three years. In contrast, Wipro saw a 4.7% decline in profit and a 1.4% drop in revenue. The results highlight how major Indian IT firms are managing shifting demand and the integration of artificial intelligence.
The latest first-quarter results for the Indian IT sector have revealed a notable contrast between Tech Mahindra and Wipro. Tech Mahindra reported a sequential revenue increase of 2.2% to $1.66 billion, with net profit rising 6.7% to $154 million. This performance represents the company’s most significant growth in three years. A key contributor to this improvement was an expansion in operating margins, which rose by 60 basis points to reach 14.4%. This marks the eleventh consecutive quarter in which the company has managed to improve its profit margins, largely through the securing of higher-value deals and increased use of automation.
Wipro Faces Margin and Revenue Pressure
Meanwhile, Wipro reported a more challenging quarter, with revenue declining 1.4% sequentially to $2.61 billion. The company’s net profit fell 4.7% to $355 million compared to the previous quarter. Wipro’s operating margins decreased by 130 basis points to 16%, hitting a nearly three-year low. Management attributed this performance to several factors, including costs related to salary hikes, upfront capital spending on artificial intelligence, and a limited number of new large deal wins. CEO Srinivas Pallia noted that discretionary spending by clients remains subdued, indicating that the overall demand environment has not shown signs of recovery.
Strategic Shifts and Workforce Changes
Both companies are navigating a period where artificial intelligence is changing traditional outsourcing business models. Tech Mahindra’s CEO Mohit Joshi remains optimistic, citing a strong order book and stable client relationships as reasons to expect continued growth, even in a seasonally difficult quarter. Wipro, however, continues to balance its long-term investments in technology with current market challenges.
The divergence between the two firms is also visible in their workforce management. Tech Mahindra reduced its headcount by 863 employees during the quarter, ending with a total of 146,760 staff. Conversely, Wipro increased its headcount by 888, reaching a total of 243,044 employees. These different approaches to staffing come as the industry continues to evaluate how automation can replace or augment labor-intensive roles.
Investors looking ahead will focus on how these companies manage costs and order wins in the coming months. With major peers like Tata Consultancy Services and HCL Technologies having already reported stable but muted performance, the focus now shifts to Infosys, which is scheduled to release its results on July 23. The ability of these firms to protect profit margins while navigating a period of lower client spending will remain a key monitorable.