Q2 FY2026 IT Software Sector Analysis

IT - Software Sector Analysis: Q2 FY26 Insights and Outlook

**Summary:** The IT - Software sector, as evidenced by the Q2 FY26 performance and outlook of major players like TCS, Infosys, HCLTech, Wipro, LTIMindtree, Tech Mahindra, Persistent Systems, Coforge, Tata Elxsi, IKS Health, Tata Technologies, Affle 3i, Firstsource Solutions, Sagility, eClerx Services, Zensar Technologies, Intellect Design Arena, Newgen Software Technologies, Cyient, and LatentView Analytics, is navigating a complex landscape characterized by persistent macroeconomic uncertainties and evolving client priorities. While discretionary spending remains tight, a significant shift towards AI-led transformation, cost optimization, and vendor consolidation is driving deal momentum. Companies are aggressively investing in Generative AI (GenAI) capabilities, upskilling talent, and forging strategic partnerships to capitalize on this new wave of demand. Margins are under pressure from wage hikes and AI investments but are being managed through operational efficiencies, pyramid rebalancing, and strategic portfolio adjustments. The outlook for H2 FY26 suggests a mixed picture with seasonal headwinds (furloughs) but an anticipated pickup in demand, particularly for AI-infused solutions and large-scale modernization projects, leading to cautious optimism for FY27.

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A. INDUSTRY OVERVIEW & MARKET LANDSCAPE

The IT - Software sector is undergoing a profound transformation, primarily driven by the rapid advancements and adoption of Artificial Intelligence (AI), particularly Generative AI (GenAI). The market is characterized by a dual demand environment: clients are seeking both cost optimization and efficiency gains through automation and AI, alongside strategic transformation and modernization initiatives. This dynamic is leading to a significant re-evaluation of IT spending, with a clear shift towards value-driven engagements and outcome-based models.

**Total Addressable Market Size and Growth Rates:** While specific aggregate market size figures for the entire sector are not explicitly provided across all documents, individual company revenues offer a glimpse into the scale. For instance, IKS Health highlights a US Healthcare Expenditure TAM of US$5 trillion in CY2024, with an outsourced market of US$34 billion (CY2023), projected to grow at an 8% CAGR (TAM) and 12% CAGR (outsourced market) from 2023-2028E. This indicates significant untapped potential in specialized segments. The overall IT services industry growth is expected to be higher next year if macro conditions improve (Infosys, HCLTech).

**Market Structure and Segmentation:** The market is highly segmented by service offerings, industry verticals, and geographic regions.

• **Service Offerings:**

• **Industry Verticals:**

• **Customer Type:** Large enterprises, mid-market, small & medium businesses, government. There's a trend of clients consolidating vendors for larger, more integrated deals.

**Key End Markets and Applications:** * **AI-driven Transformation:** Across all industries, for productivity, customer experience, new product development. * **Cloud Modernization:** Migrating legacy systems to cloud, building cloud-native applications. * **Data & Analytics:** Building unified data fabrics, leveraging data for AI, advanced analytics. * **Cybersecurity:** Increasing sophistication of threats drives demand for advanced security solutions. * **Software-Defined Vehicles (SDV):** Automotive industry's shift towards software-centric architectures. * **Digital Engineering (ER&D):** R&D outsourcing, product development, embedded systems. * **Business Process Services (BPS):** Automation of back-office functions, customer support, claims processing.

**Geographic Distribution and Regional Dynamics:** * **North America (USA):** Remains the largest market for most Indian IT service providers, often contributing 50-80% of revenue (e.g., LTIMindtree 74.2%, Persistent 79.8%, eClerx 80%, LatentView 86%, Firstsource 69.4%). Growth is mixed, with some companies reporting declines (Tech Mahindra -2.7% YoY, Wipro Americas 2 decline) due to macro challenges, while others show modest growth (TCS 0.8% CC QoQ, Infosys Americas 14 deals). * **Europe:** Showing resilience and growth for some (HCLTech 7.6% YoY Services, Coforge 28.9% revenue mix, LTTS 37.9% YoY, Tech Mahindra 5.5% YoY, Zensar 5.2% QoQ). Companies are investing more in nearshore centers and local talent. * **India:** A growing market, especially for digital public infrastructure, government projects, and domestic enterprises (TCS 4.0% CC QoQ, HCLTech 0.6% YoY Services, LTTS 19% YoY, Newgen 29% revenue mix). * **Asia Pacific (APAC) & Middle East & Africa (MEA):** Emerging as high-growth regions for some (TCS MEA 5.9% CC QoQ, HCLTech ROW 17.9% YoY Services, Coforge 13.2% revenue mix, Zensar Africa 6.9% QoQ). * **Latin America:** Smaller but growing for some (TCS 0.3% CC QoQ, Infosys strengthening nearshore).

**Market Maturity and Lifecycle Stage:** The IT services market is mature in its traditional offerings but is in a rapid growth phase for digital transformation and AI-led services. Companies are actively pivoting their portfolios, talent, and go-to-market strategies to capture opportunities in these emerging areas. The shift from traditional IT outsourcing to strategic partnership for digital and AI transformation signifies a move towards a more value-added, outcome-based model.

**Industry Value Chain and Ecosystem:** The value chain involves: 1. **Consulting & Advisory:** Helping clients define their digital and AI strategies (e.g., Infosys Topaz, HCLTech AI Advisory). 2. **Solution Design & Development:** Building custom applications, platforms, and AI models. 3. **Implementation & Integration:** Deploying solutions, integrating with existing systems. 4. **Managed Services & Support:** Ongoing maintenance, operations, and optimization. 5. **Product/Platform Development:** Companies like Newgen, Intellect Design Arena, and Affle 3i offer proprietary software products.

The ecosystem is characterized by strong partnerships with hyperscalers (AWS, Azure, Google Cloud), technology vendors (NVIDIA, IBM, Salesforce, SAP), academic institutions, and AI startups. Companies are also building internal innovation hubs and AI Centers of Excellence.

B. FINANCIAL & ECONOMIC PROFILE

The Q2 FY26 financial performance across the IT - Software sector reflects a mixed but generally resilient picture, with companies navigating macroeconomic headwinds while strategically investing in growth areas, particularly AI.

**Industry Aggregate Revenue Scale and Growth Trajectory:** While a consolidated industry revenue is not provided, the individual company revenues indicate significant scale. * **TCS:** $7,466 Mn (Q2 FY26), 2.4% YoY growth (reported), 0.8% CC QoQ. * **Infosys:** $4,740 Mn (approx, based on 2.9% YoY CC growth on H1 FY25 revenue of $9.4Bn), 2.9% YoY CC growth, 2.2% CC QoQ. * **HCLTech:** $3,644 Mn (Q2 FY26), 4.6% YoY CC growth, 2.4% CC QoQ. Services business grew 5.5% YoY CC. * **Wipro:** $2,700 Mn (approx, based on -2.6% YoY CC growth on Q2 FY25 revenue of $2.77Bn), -2.6% YoY CC growth, 0.3% CC QoQ. * **LTIMindtree:** $1,180.1 Mn (Q2 FY26), 4.8% YoY growth, 2.4% CC QoQ. * **Tech Mahindra:** $1,586 Mn (Q2 FY26), -0.2% YoY growth, 1.6% CC QoQ. * **Persistent Systems:** $406.2 Mn (Q2 FY26), 17.6% YoY growth, 4.2% QoQ. * **Coforge:** $462.1 Mn (Q2 FY26), 26.6% YoY growth, 5.9% CC QoQ. * **Tata Elxsi:** INR 918.1 Cr (Q2 FY26), -3.9% YoY growth, 1% CC QoQ. * **IKS Health:** INR 7,811 Mn (Q2 FY26), 22% YoY growth (INR), 17% YoY growth (USD). * **Tata Technologies:** $150.9 Mn (Q2 FY26), 4.5% QoQ CC growth. * **Affle 3i:** INR 6,467 Mn (Q2 FY26), 19.1% YoY growth. * **Firstsource Solutions:** $265 Mn (Q2 FY26), 20.1% YoY growth, 13.8% YoY CC growth. * **Sagility:** $189.4 Mn (Q2 FY26), 25.2% YoY growth (INR), 20% YoY CC growth. * **eClerx Services:** $115.5 Mn (Q2 FY26), 17.0% YoY growth, 5.4% CC QoQ. * **Zensar Technologies:** $162.8 Mn (Q2 FY26), 4.2% YoY growth, 0.0% CC QoQ. * **Intellect Design Arena:** INR 789 Cr (Q2 FY26), 34% YoY growth. * **Newgen Software Technologies:** INR 4,008 Mn (Q2 FY26), 11.0% YoY growth. * **Cyient (DET):** $164.4 Mn (Q2 FY26), 0.1% YoY growth, 0.5% CC QoQ. * **LatentView Analytics:** $29.6 Mn (Q2 FY26), 18.8% YoY growth, 7.2% QoQ. * **Happiest Minds Technologies:** $65.122 Mn (Q2 FY26), 10% YoY growth, 2.3% CC QoQ.

Growth rates vary significantly, with some companies like Coforge, Persistent, LTIMindtree, IKS Health, Firstsource, Sagility, Intellect Design Arena, Newgen, and LatentView showing strong double-digit YoY growth, while larger players like TCS, Infosys, Wipro, HCLTech, Tech Mahindra, Tata Elxsi, and Cyient are in low single digits or even negative YoY in constant currency, reflecting the challenging macro environment and their larger base.

**Profitability Levels Across Companies (Q2 FY26):** * **Operating Margin (EBIT/EBITDA):** * **High (20%+):** TCS (25.2% excl. severance), Infosys (21%), Tata Elxsi (21.1% EBITDA), IKS Health (35% EBITDA), eClerx (28.8% EBITDA), Sagility (26.2% Adj. EBITDA), LatentView (22.5% Adj. EBITDA), Happiest Minds (20.2% EBITDA), Intellect Design Arena (23% EBITDA), Newgen (25.5% Adj. EBITDA), Affle 3i (22.6% EBITDA). * **Mid (15-20%):** HCLTech (17.5%), Wipro (16.7% reported, 17.2% adjusted), LTIMindtree (15.9% EBIT), Persistent (16.3% EBIT), Tata Technologies (15.7% EBITDA reported, 16.4% adjusted), Zensar (15.4% EBITDA). * **Lower (below 15%):** Tech Mahindra (12.1% EBIT), Coforge (14.0% EBIT), Firstsource (11.5% EBIT), Cyient DET (12.2% EBIT).

• **Net Income Margin (PAT):**

**Range of Margins with Median and Outliers Noted:** * **EBIT/EBITDA Margin Range:** From ~9.4% (Cyient Group) to 35% (IKS Health). * **Median Operating Margin (EBITDA/EBIT):** Roughly 17-20%. * **Outliers:** IKS Health (35% EBITDA) stands out for its high profitability, likely due to specialized domain and outcome-based models. eClerx (28.8% EBITDA), Sagility (26.2% Adj. EBITDA), TCS (25.2% Adj. Operating Margin), Newgen (25.5% Adj. EBITDA), Intellect Design Arena (23% EBITDA), LatentView (22.5% Adj. EBITDA), and Affle 3i (22.6% EBITDA) also demonstrate strong profitability. Wipro (16.7% reported) and Tech Mahindra (12.1% EBIT) are on the lower end among the large players.

**Return Profiles (ROCE, ROE, ROIC) by Company (Q2 FY26 / LTM):** * **TCS:** ROE > 50%. * **Infosys:** ROE 29.1%. * **HCLTech:** ROIC 38.6% (Company), 45.3% (Services), 21.8% (Software). * **LTIMindtree:** ROE 21.8%. * **Tech Mahindra:** ROCE 24.4%. * **Persistent Systems:** ROCE 45.5%, ROE 26.2%. * **IKS Health:** ROE 32.3%. * **LatentView Analytics:** ROCE 39%. * **Happiest Minds:** ROCE 23%, ROE 14% (FY25). * **Cyient (DET):** ROCE 23%, ROE 14% (FY25).

Companies like TCS, Infosys, HCLTech, Persistent, and IKS Health demonstrate very strong return profiles, indicating efficient capital utilization.

**Working Capital Characteristics and Cash Conversion Cycles:** * **DSO (Days Sales Outstanding):** * **Lower (below 80 days):** Infosys (71 days, 87 days including unbilled), TCS (75 days), HCLTech (78 days total), eClerx (76 days), Zensar (75 days total). * **Mid (80-100 days):** LTIMindtree (82 days), Persistent (Billed 54 days, Unbilled 21 days), Happiest Minds (88 days), Cyient DET (88 days). * **Higher (above 100 days):** Wipro (not explicitly stated, but implies higher with lower FCF conversion), Coforge (114 days total, 94 days billed), Tata Technologies (109 days), Newgen (124 days), Intellect Design Arena (122 days excl. GeM and contractually not due).

• **Free Cash Flow (FCF) Conversion:**

Generally, the sector demonstrates strong cash generation capabilities, with most companies converting a significant portion of their net income into free cash flow. Higher DSO for some companies like Coforge, Tata Technologies, Newgen, and Intellect Design Arena might indicate longer payment cycles or specific project structures.

**Capital Intensity Requirements:** The IT services sector is generally asset-light, with primary investments in human capital, R&D, and sales & marketing. However, some companies are making strategic capital investments: * **TCS:** Approved new subsidiary for Sovereign AI datacenter with capacity up to 1 Giga Watt, capex of ~$1 billion per 150-megawatt over 5-7 years. This is a significant deviation from the traditional asset-light model. * **Intellect Design Arena:** Investing in a state-of-the-art 7.25 lakh sq. ft. facility at Siruseri campus for AI labs and academies. * **Persistent:** Increased Capex on facility and IT (20 bps headwind on EBIT margin). * **Tata Elxsi:** Depreciation declining due to no new significant capex. * **Newgen:** R&D investment 9% of revenues, Sales & Marketing 21% of revenues.

Overall, while core IT services remain asset-light, the push into AI infrastructure, specialized labs, and product development requires targeted capital expenditure.

**Revenue Quality (Recurring vs One-Time, Contract Length):** * **Annuity/Recurring Revenue:** Highly valued for stability and predictability. * **Newgen:** Annuity Revenues (ATS/AMC, Cloud/Subscription License, Support) were 56% of revenues in FY25, growing at 18% CAGR (FY23-FY25). * **Intellect Design Arena:** LLR (License-Linked Revenue = Platform + License + AMC) was INR 423 Cr (69% YoY growth) in Q2 FY26. ARR crossed INR 1,080 Cr. * **Affle 3i:** CPCU (Cost Per Converted User) business contributed 97.7% of revenue from contracts, indicating a performance-based recurring model. * **PB Fintech:** Renewal trail revenue (12-month rolling) was ₹774 Cr. Quarterly insurance renewals revenue (ARR) was ₹758 Cr. * **HCLTech Software:** ARR $1.06B, up 0.6% YoY CC. * **Long-term Contracts:** Many companies emphasize securing multi-year deals. * **IKS Health:** Upfront guarantee payments strategy for deeply embedded, non-cancellable, long-term contracts (10-15 years duration). * **Coforge:** Order book executable over next 12 months $1.63 Bn (26.7% YoY growth). * **LTTS:** Record high large deal TCV of ~$300 Mn, including $100 Mn (5+ years duration) and $60 Mn deals. * **Tata Elxsi:** Bayer deal is multi-year (at least 5 years). * **Firstsource:** Average tenure of top 5 clients is over 20 years. * **Sagility:** PMPM deal constructs with gain share, AI agents charged at a percentage of human agent cost, bundled technology and services. * **Fixed Price vs Time & Material:** * **Tata Elxsi:** Fixed Price 56.3%, Time & Material 43.7%. * **Coforge:** Fixed Price 45.9%, Time & Materials 54.1%. * **Happiest Minds:** Fixed Price 24.8%. * **Tech Mahindra:** Margin expansion driven by fixed-price project productivity.

The trend is towards higher recurring revenue, longer contract durations, and outcome-based models, especially with the advent of AI, which allows for more predictable productivity gains.

C. COMPETITIVE STRUCTURE & DYNAMICS

The IT - Software sector is highly competitive, characterized by a large number of players ranging from global giants to niche specialists. The competitive landscape is dynamic, with constant innovation, M&A activity, and evolving client demands shaping market positions.

**Number of Players and Market Concentration:** The provided data includes 20 companies, representing a mix of large-cap (TCS, Infosys, HCLTech, Wipro), mid-cap (LTIMindtree, Tech Mahindra, Persistent, Coforge, Tata Elxsi, Firstsource, Sagility, eClerx, Zensar, Cyient, Happiest Minds), and niche/product-focused players (IKS Health, Tata Technologies, Affle 3i, Intellect Design Arena, Newgen Software, LatentView Analytics). The market is not highly concentrated at the top, with even the largest players holding significant but not dominant market shares globally. However, within specific service lines or geographies, concentration can be higher.

**Market Share Distribution (with specific percentages):** Specific overall market share percentages are not provided, but client concentration metrics offer insight into individual company reliance on key accounts: * **TCS:** Top 5 clients TCV not given, but overall TCV $10 billion. * **Infosys:** Large deal TCV $3.1 billion (Q2 FY26), H1 deal wins $6.9 billion. * **HCLTech:** Top 5 Clients Contribution to Revenue (LTM) 12.4%, Top 10 19.9%, Top 20 29.5%. * **Wipro:** Top Customer Revenue Contribution 4.8%, Top 5 14.4%, Top 10 24.0%. * **LTIMindtree:** Top 5 Clients 25.3%, Top 10 32.8%, Top 20 43.5%, Top 40 56.1%. * **Tech Mahindra:** Top 5 15.6%, Top 10 24.3%, Top 20 37.1%. * **Persistent Systems:** Top 5 clients revenue up 23.4%, Top 10 up 22.4%, Top 20 up 22.7%, Top 50 up 21.4%. * **Coforge:** Top 10 30.8%, Top 5 21.0%. * **Tata Elxsi:** Top 5 44.2%, Top 10 54.7%. * **IKS Health:** Top 3 Client 63.1%, Top 5 Client 74.4%, Top 10 Client 87.6%. (High concentration) * **Tata Technologies:** Top 5 (Services) 10-50 Mn: 3, 5-10 Mn: 8, 1-5 Mn: 33. * **Firstsource Solutions:** Top 5 clients 28.9%, Top 10 42.3%, Top 20 57.1%. * **Sagility:** Top 3 Client 63.1%, Top 5 Client 74.4%, Top 10 Client 87.6%. (High concentration) * **eClerx Services:** Top 10 63%. * **Zensar Technologies:** Top 5 clients 27.0%, Top 10 40.5%, Top 20 57.1%. * **LatentView Analytics:** Top 5 Clients 60%, Top 10 74%, Top 20 85%. (High concentration) * **Happiest Minds:** Top 58 clients contribute >$1M.

Companies like IKS Health, Sagility, Tata Elxsi, and LatentView Analytics show higher client concentration, indicating a more specialized or niche focus, while larger players like TCS, Infosys, HCLTech, and Wipro have a more diversified client base.

**Competitive Intensity Assessment (Porter's 5 Forces style):** * **Threat of New Entrants: Moderate to High.** While capital intensity is relatively low for pure services, building scale, brand, deep domain expertise, and a global delivery model is challenging. However, the rise of AI and specialized platforms allows niche players to emerge quickly with differentiated offerings. * **Bargaining Power of Buyers: High.** Clients, especially large enterprises, have significant bargaining power due to the availability of multiple vendors, increasing demand for cost optimization, and the ability to consolidate vendors. The "AI impact" on renewals often means clients ask for greater savings, which they then reinvest in new work (Wipro). * **Bargaining Power of Suppliers (Talent): Moderate to High.** Skilled talent, especially in niche areas like AI, cloud, and cybersecurity, is a critical resource. Wage inflation and attrition rates (e.g., Wipro 14.9%, Infosys 14.3%, TCS 13.3%, LTIMindtree 14.2%, Persistent 13.8%, Coforge 11.4%, Tata Elxsi 15.4%, Zensar 9.8%, Happiest Minds 17.4%, LatentView 22%, Firstsource 28%, Sagility 26.3%, eClerx 20.3%) indicate competition for talent. * **Threat of Substitute Products or Services: Moderate.** Automation and AI tools can substitute some human-led services, leading to productivity gains and potential "renewal deflation" (HCLTech). However, complex transformation projects still require human expertise, and AI often augments rather than fully replaces. * **Rivalry Among Existing Competitors: High.** The market is crowded, leading to intense competition for deals. Companies differentiate through domain expertise, technology platforms, talent, and pricing.

**Entry Barriers and Competitive Moats:** * **Scale and Global Delivery:** Large players benefit from extensive global footprints, large talent pools, and the ability to handle mega-deals. * **Domain Expertise:** Deep understanding of specific industries (e.g., IKS Health in US Healthcare, Intellect Design Arena in FinTech, LTTS/Tata Elxsi/Tata Technologies in ER&D) creates strong moats. * **Proprietary Platforms & IP:** Companies investing in their own software platforms (e.g., NewgenONE, Intellect's eMACH.ai, Infosys Topaz, HCLTech AI Force, Persistent SASVA, Tata Elxsi TEPlay, Affle 3i's Consumer Platform Stack) create stickiness and differentiation. * **Client Relationships:** Long-standing relationships and preferred vendor status (e.g., Firstsource's top 5 clients average 20+ years tenure) are significant barriers. * **Talent & Upskilling:** The ability to attract, train, and retain high-end talent, especially in AI, is a critical differentiator.

**Pricing Power Dynamics and Pricing Trends:** Pricing power is generally constrained by high competitive intensity and client focus on cost optimization. However, AI-led solutions and outcome-based models offer opportunities for value-based pricing. * **AI-linked productivity:** Can lead to "renewal deflation" in some SOWs (HCLTech), but also opportunities to consolidate more work. * **Outcome-based projects:** Infosys notes a shift towards these, implying more nonlinearity in billing. * **GenAI projects:** Happiest Minds reports getting 20-25% premium on GenAI projects. * **COLA clauses:** Tech Mahindra mentions these and a "right role/right pricing" strategy for tenured resources.

**Consolidation Trends and M&A Activity:** M&A is a consistent theme, used for capability acquisition, market expansion, and client access. * **TCS:** Stepped up M&A efforts for high-end services, IP, market presence; acquired ListEngage (marketing tech and Salesforce leader). * **Infosys:** Joint venture with Versent in Australia; looking at other acquisitions. * **Wipro:** Harman Digital Transformation Solutions (DTS) acquisition. * **Tata Technologies:** Acquisition of ES-TEC (Germany) for ADAS, Connected Driving, Embedded Software expertise and access to Volkswagen. * **Persistent:** Decision Point acquisition (completed before Q2 FY25) showing synergies in consumer goods practice. * **eClerx:** M&A focus on capability (horizontal) or vertical (white space/jump start). * **Happiest Minds:** PureSoftware & Aureus acquisitions leveraging capabilities for cross-selling. * **IKS Health:** AQuity Acquisition Integration & Optimization. * **Tech Mahindra:** Programmatic M&A may take shape, but only tuck-in acquisitions for next 6 quarters.

**Competitive Advantages of Each Player (Summary):** * **TCS:** Scale, strong deal momentum ($10B TCV), deep client relationships, aggressive AI vision ("world's largest AI-led technology services company"), significant investments in AI infrastructure (Sovereign AI datacenter). * **Infosys:** Strong large deal wins ($3.1B in Q2, $1.6B mega deal post-quarter), Infosys Topaz (holistic AI suite), internal AI transformation, strong localization efforts. * **HCLTech:** Robust bookings ($2.6B without mega deal), strong services growth, differentiated IP (AI Force platform, AI Factory), focus on Advanced AI revenue ($100M+). * **Wipro:** Strong large deal bookings ($2.85B), Wipro Intelligence (AI platforms), consulting-led approach, focus on 5 strategic priorities. * **LTIMindtree:** Strong order inflow ($1.59B), broad-based performance, AI-centric organization vision, BlueVerse™ studios and frameworks. * **Tech Mahindra:** Margin expansion (8 consecutive quarters), strong deal wins ($816M net new), TechM Orion (agentic AI platform), recognized as Gartner leader in Gen AI consulting. * **Persistent Systems:** Consistent high growth (17.6% YoY revenue), strong order book, AI-led platform-driven digital engineering, deep domain expertise in BFSI, Healthcare, Software. * **Coforge:** High revenue growth (25.7% YoY CC), strong order intake ($514M), AI-first delivery model, scaled AI portfolio with platforms (Qguard.ai, FusionWorld.ai). * **Tata Elxsi:** Strong ER&D focus (Transportation, Media, Healthcare), deep OEM relationships, strategic partnerships (Synopsys, KAVIA AI), in-house platforms (TEPlay, Mobius+). * **IKS Health:** Specialized in US Healthcare, comprehensive care enablement platform, proven expertise, agentic leadership (AI-native), outcome-oriented deals, strong R&D investment. * **Tata Technologies:** Pureplay ER&D and Digital Solutions specialist, strong in Automotive (81% of Services revenue), leading in electrification, ES-TEC acquisition for European presence. * **Affle 3i:** Consumer Intelligence Driven Global Technology Company, AI-led digital advertising solutions, CPCU business model, strong patent portfolio. * **Firstsource Solutions:** Specialized BPS partner, deep domain expertise in BFS, Healthcare, CMT, long-term client relationships, AI-powered BPaaS model. * **Sagility:** US Healthcare BPS specialist (Payer & Provider), strong organic growth, consulting-led approach, GenAI-based models, outcome-oriented deal constructs. * **eClerx Services:** Niche BPS player, strong profitability, analytics and automation focus, cross-sell/upsell strategy, investing in IP with GenAI. * **Zensar Technologies:** Experience, Engineering and Engagement solutions, ZenseAI platform, strong vertical growth in BFSI and Healthcare, disciplined execution. * **Intellect Design Arena:** FinTech specialist, eMACH.ai and Purple Fabric platforms, strong LLR and ARR growth, high-value "destiny deals." * **Newgen Software Technologies:** Low Code digital transformation platform (NewgenONE), strong annuity revenues, AI agents (Lumin, Harper, Marvin), strong R&D investment. * **Cyient:** Engineering DNA (30+ years), strong customer relationships, global delivery, Cyient Semiconductors carve-out, DLM (Design-Led Manufacturing) business. * **LatentView Analytics:** Data and analytics specialist, preferred partner for Fortune 500, strong growth in Financial Services and Consumer, Databricks partnership, AI Center of Excellence. * **Happiest Minds Technologies:** AI-led offshore model, Generative AI Business Unit (GBS) as key growth engine, Net New Sales Initiative, strong focus on data, cybersecurity, GenAI.

D. OPERATIONAL CHARACTERISTICS

Operational efficiency, talent management, and technology adoption are critical for success in the IT - Software sector. Companies are constantly optimizing their delivery models, investing in automation, and upskilling their workforce to meet evolving client demands and maintain profitability.

**Capacity and Utilization Trends Across Companies:** * **Utilization Rates (excluding trainees):** * **High (85%+):** Infosys (85%), LTIMindtree (88.1%), Persistent (88.2%). * **Mid (75-85%):** Tech Mahindra (84.4%), Zensar (84.8%), eClerx (75.1%), Happiest Minds (80.7%), Cyient DET (80.7%), LatentView (84%). * **Lower:** Tata Elxsi (improved from ~66% to above 70%). * **Happiest Minds:** GBS utilization improved from 40.8% to ~62%.

High utilization rates generally indicate efficient deployment of talent and strong demand. Companies are actively managing utilization to balance growth, profitability, and talent development.

**Production Economics and Cost Structures:** Employee costs remain the largest component of the cost structure for IT services companies. * **Employee Cost as % of Revenue (Q2 FY26):** * TCS: Employee cost (COR) 46.9%, Employee cost (SG&A) 11.7% (Total ~58.6%). * HCLTech: Employee benefits expense 57.3%. * Infosys: Wage hikes, pyramid rebalancing, onsite mix reduction. * Wipro: Wage hikes impact margins. * Persistent: Merit increments effective Oct 1, 2025 (180 bps impact on next quarter's margins). * Tata Elxsi: 40 bps higher employee costs (campus onboarding, sales strengthening). * Tech Mahindra: Fixed-price project productivity, SG&A optimization. * eClerx: 1,000-odd people addition in Q2. * Zensar: Annual salary increments across geographies. * Happiest Minds: Pay increases ~INR 11-12 crores in Q2.

Other significant costs include subcontracting, fees to external consultants, equipment & software, travel, and facility costs. * **Subcontracting/Outsourcing Costs:** * Infosys: Subcontracting cost increased. * HCLTech: Outsourcing costs 14.0% of revenue. * Wipro: Not expecting higher subcontractor costs.

**Supply Chain Structure and Dependencies:** The "supply chain" in IT services primarily refers to talent acquisition and deployment. * **Talent Acquisition:** Hiring freshers (Infosys 12,000+ in H1, HCLTech 5,196 in Q2, LTIMindtree 2,604 in Q2), lateral hiring, campus recruitment. * **Localization:** Reducing reliance on H1B visas by increasing local hiring and building nearshore/onshore centers (Infosys, HCLTech, Wipro, Tech Mahindra, Persistent, Happiest Minds, Cyient). * TCS: H1B associates to US (FY26 YTD) ~500. * Infosys: US workforce minority dependent on Infosys sponsorship. * HCLTech: H1B visa dependence down to a few hundred visas a year (under 1% of global workforce). * Wipro: Progressively reducing H1-B dependence, >80% of US workforce localized. * Tech Mahindra: US workforce on H-1B under 1% of global workforce, visa dependence in US under 30%. * Persistent: Not dependent on H-1Bs. * Happiest Minds: Only 2 professionals traveled to US on H1-B in past 12 months. * Cyient: >90% of workforce across geography are local nationals. * **Global Delivery Model:** A mix of offshore, nearshore, and onsite delivery. * **Offshore Mix:** TCS (not specified, but high), Infosys (reduced onsite mix by 40 bps QoQ), Wipro (60.2%), LTIMindtree (85.2%), Tata Elxsi (73.9%), Happiest Minds (87.5%), Firstsource (41.6% Offshore & Nearshore), eClerx (81% North America, 19% Europe/ROW). * **Nearshore Centers:** Infosys strengthening centers in US, Canada, Mexico, Latin America, Europe. LatentView expanding nearshore centers (Canada, Mexico, LATAM).

**Technology Landscape and Innovation Pace:** The sector is characterized by a rapid pace of technological innovation, with AI/GenAI being the dominant force. * **AI/GenAI Investments:** All companies are heavily investing in AI capabilities, platforms, and talent. * **Platforms:** Infosys Topaz, HCLTech AI Force, TechM Orion, Persistent SASVA, Coforge Qguard.ai/FusionWorld.ai, LTTS PLxAI, NewgenONE with AI modules, Intellect's Purple Fabric AI, Zensar ZenseAI. * **Use Cases:** AI-led code generation, autonomous clinical documentation, fraud detection, predictive analytics, supply chain optimization, customer engagement, security, quality engineering. * **Partnerships:** NVIDIA, Microsoft, AWS, Google Cloud, IBM, Intel, Meta, Open AI, Synopsys, Databricks, SiMa.ai, Anthropic. * **Cloud:** Continued migration and optimization of cloud infrastructure. * **Cybersecurity:** Increasing sophistication of threats drives demand for advanced security solutions. * **Digital Engineering:** Software-defined vehicles, IoT, embedded systems.

**Operational Efficiency Benchmarks:** * **Pyramid Rebalancing:** TCS (40 bps positive impact on margins), Infosys (freshers onboarding for pyramid benefit). * **Automation:** Infosys Project Maximus (30 bps margin expansion), HCLTech Project Ascend. * **SG&A Optimization:** Tech Mahindra Project Fortius, LTIMindtree Fit for Future program. * **Revenue per Employee:** HCLTech (continues to grow 1.8% YoY aligned with AI growth strategy).

**Key Performance Indicators (Company-specific and Industry Averages):** * **TCV (Total Contract Value) / Deal Wins:** A key indicator of future revenue. * TCS: $10 billion (Q2 FY26), 16% YoY growth. * Infosys: $3.1 billion (Q2 FY26), $1.6 billion mega deal post-quarter. * HCLTech: $2.6 billion (Q2 FY26), 15.8% YoY growth. * Wipro: $4.7 billion total, $2.85 billion large deals (90.5% YoY growth). * LTIMindtree: $1.59 billion order inflow (22% YoY growth). * Tech Mahindra: $816 million net new (57% increase LTM-to-LTM). * Persistent: TCV $609.2 million, ACV $447.9 million. * Coforge: $514 million order intake. * LTTS: $292 million large deal TCV. * Newgen: $46 million deal wins. * Intellect Design Arena: 18 new deals in Q2 FY26, deal funnel >INR 12,000 Cr. * Sagility: $34 million ACV won from new and existing clients. * **Client Metrics:** Number of $1M+, $10M+, $100M+ clients. * TCS: 60 clients >$100M (down 2 QoQ), 136 clients >$50M (up 5 QoQ). * HCLTech: 22 clients >$100M, 54 clients >$50M. * Wipro: 16 clients >$100M, 45 clients >$50M. * LTIMindtree: 14 clients >$50M. * Persistent: 4 clients >$75M, 4 clients >$50M. * Tech Mahindra: 26 clients >$50M. * Coforge: 34 clients >$10M. * LTTS: 7 clients >$30M. * Firstsource: 2 clients >$50M. * Sagility: 8 clients >$20M. * eClerx: 20 clients >$3M. * Zensar: 6 clients >$20M. * LatentView: 356 clients >INR 10 Mn annual revenue. * Happiest Minds: 4 clients >$10M. * **Attrition:** Voluntary LTM attrition rates are generally in the 10-20% range, with some BPS players higher. * TCS: 13.3%. * Infosys: 14.3%. * HCLTech: 12.6%. * Wipro: 14.9%. * LTIMindtree: 14.2%. * Tech Mahindra: 12.8%. * Persistent: 13.8%. * Coforge: 11.4%. * Tata Elxsi: 15.4%. * Zensar: 9.8%. * Happiest Minds: 17.4%. * LatentView: 22%. * Firstsource: 28%. * Sagility: 26.3%. * eClerx: 20.3%.

**Asset Efficiency Metrics:** * **DSO:** As discussed in Financial & Economic Profile. * **ROCE/ROE/ROIC:** As discussed in Financial & Economic Profile.

E. GROWTH DYNAMICS & DRIVERS

The IT - Software sector's growth dynamics are currently shaped by a confluence of macroeconomic pressures and transformative technological shifts, primarily AI. Companies are navigating a period where traditional growth levers are muted, while new, AI-driven opportunities are rapidly emerging.

**Historical Growth Trajectory (3-5 year view with specific rates):** * **Persistent Systems:** 25.6% 4-Year Revenue CAGR (FY21-FY25). * **Coforge:** 28.8% 8-Year CAGR (FY17-FY25). * **IKS Health:** 27.9% Revenue CAGR (2016-2025). * **Affle 3i:** 31.2% Revenue CAGR (H1 FY22-H1 FY26). * **eClerx Services:** 16.6% 4-Year Revenue CAGR (FY21-FY25). * **Newgen Software:** 24% Revenue CAGR (FY23-FY25). * **LatentView Analytics:** 19.3% Revenue CAGR (FY22-LTM Q2 FY26).

These figures highlight strong historical growth for many players, particularly those in niche or specialized segments, or those with strong product/platform offerings. Larger, more diversified players have seen more moderate growth in recent periods due to their scale and broader market exposure.

**Current Growth Rates and Acceleration/Deceleration (Q2 FY26 CC QoQ / YoY):** * **TCS:** 0.8% QoQ, 2.4% YoY (reported). Deceleration. * **Infosys:** 2.2% QoQ, 2.9% YoY. Deceleration. * **HCLTech:** 2.4% QoQ, 4.6% YoY. Moderate acceleration in Services. * **Wipro:** 0.3% QoQ, -2.6% YoY. Deceleration/Decline. * **LTIMindtree:** 2.4% QoQ, 4.8% YoY. Moderate growth. * **Tech Mahindra:** 1.6% QoQ, -0.3% YoY. Deceleration/Decline. * **Persistent Systems:** 4.2% QoQ, 17.6% YoY. Strong acceleration. * **Coforge:** 5.9% QoQ, 25.7% YoY. Strong acceleration. * **Tata Elxsi:** 1.0% QoQ, -8.3% YoY. Deceleration/Decline. * **IKS Health:** 17% YoY (USD). Strong growth. * **Tata Technologies:** 4.5% QoQ. Moderate growth. * **Affle 3i:** 4.2% QoQ, 19.1% YoY. Strong growth. * **Firstsource Solutions:** 2.0% QoQ, 13.8% YoY. Strong growth. * **Sagility:** 20% YoY. Strong growth. * **eClerx Services:** 5.4% QoQ, 16.3% YoY. Strong growth. * **Zensar Technologies:** 0.0% QoQ, 3.4% YoY. Deceleration. * **Intellect Design Arena:** 34% YoY (INR). Strong acceleration. * **Newgen Software:** 11.0% YoY (INR). Moderate growth. * **Cyient (DET):** 0.5% QoQ, -0.6% YoY. Deceleration/Decline. * **LatentView Analytics:** 7.2% QoQ, 18.8% YoY. Strong acceleration. * **Happiest Minds Technologies:** 2.3% QoQ, 10% YoY. Moderate growth.

The sector is experiencing a divergence in growth, with mid-tier and specialized players often outperforming the larger, more diversified companies in percentage terms. This is partly due to their agility, niche focus, and ability to capture specific high-growth opportunities.

**Volume vs Price Contribution to Growth:** * **Infosys:** Volumes remain soft, bulk of revenue growth driven by realization increase. * **AI-led productivity:** Can lead to "renewal deflation" (HCLTech), but also opportunities for value-based pricing and larger deal sizes. * **Happiest Minds:** Getting 20-25% premium on GenAI projects.

The contribution of volume growth is currently subdued due to macro uncertainties, while pricing is influenced by a mix of cost optimization demands and value-based pricing for advanced AI/digital services.

**Organic vs Inorganic Growth Components:** * **Organic Growth:** Most companies emphasize organic growth through new deal wins, deepening client relationships, and expanding service offerings. * **Sagility:** Organic growth 16% YoY (INR), 11.1% (CC). * **Inorganic Growth (M&A):** Used strategically to acquire capabilities, market presence, or client access. * **TCS:** Acquired ListEngage. * **Infosys:** Joint venture with Versent. * **Wipro:** Harman Digital Transformation Solutions (DTS) acquisition. * **Tata Technologies:** ES-TEC acquisition. * **Persistent:** Decision Point acquisition. * **Happiest Minds:** PureSoftware & Aureus acquisitions. * **IKS Health:** AQuity acquisition.

**Geographic Expansion Opportunities and Progress:** * **Europe:** Many companies report strong growth and increasing investments (HCLTech, Coforge, LTTS, Tech Mahindra, Zensar). * **India:** Growing domestic market, especially for digital public infrastructure (TCS, Newgen). * **Middle East & Africa:** Emerging as high potential markets (TCS, Zensar, Happiest Minds). * **Latin America:** Strengthening nearshore presence (Infosys, LatentView). * **US Reindustrialization:** Emerging opportunity in discrete manufacturing, Medical and Pharma, high-end electronics (Coforge, LTTS).

**Product/Service Innovation Pipeline:** Innovation is heavily centered around AI and GenAI. * **AI Platforms:** Infosys Topaz, HCLTech AI Force, TechM Orion, Persistent SASVA, Coforge Qguard.ai/FusionWorld.ai, LTTS PLxAI, NewgenONE with AI modules, Intellect's Purple Fabric AI, Zensar ZenseAI. * **Industry-specific AI Solutions:** Wipro AutoCortex, WealthAI, Payer AI; LTIMindtree InsightGen, VisionX; IKS Health Agentic Platform for Clinical Documentation/Coding/Prior Authorization; Tata Elxsi Mobius+ (Battery Lifecycle Management Platform); Newgen Lumin, Harper, Marvin. * **Digital Engineering:** Software-defined vehicles (Tata Elxsi, LTTS, Tata Technologies, Cyient), electrification, ADAS. * **Cloud & Data:** Unified data fabrics, data engineering, cloud migration. * **Cybersecurity:** AI Security and Red Teaming (HCLTech).

**Adjacent Market Opportunities:** * **AI Infrastructure:** TCS's plan for a Sovereign AI datacenter is a significant move into AI infrastructure. * **Digital Advertising:** Affle 3i's focus on consumer intelligence-driven digital advertising. * **FinTech:** Intellect Design Arena's specialized FinTech platforms. * **Healthcare BPS:** IKS Health, Firstsource, Sagility are deeply embedded in the US healthcare value chain. * **Low-Code Platforms:** Newgen's NewgenONE platform. * **Semiconductors:** Cyient Semiconductors carve-out, Tata Elxsi's focus on software on top of semiconductors.

**Customer Acquisition and Penetration Trends:** * **New Logos:** Companies are actively adding new clients. * Coforge: 9 new logos. * Newgen: 15 new customer logo additions. * Sagility: 5 new clients. * Happiest Minds: 30 new clients in H1. * Cyient DET: 7 new logos of strategic importance. * LatentView: 84 new customers in Q2 FY26. * **Deepening Client Relationships:** Focus on expanding existing accounts, cross-selling, and upselling. * TCS: Clients consolidating vendors for transformation objectives. * HCLTech: Top 10 renewals, 5 came with increased ACV. * Persistent: Top five clients' revenue up 23.4%. * Sagility: Secured business from 24 existing clients, cross-sell momentum with BroadPath clients. * LatentView: "Focus Account Initiative" to identify diamond accounts and accelerate growth. * **Vendor Consolidation:** A key driver, as clients seek fewer, more strategic partners for complex transformations (TCS, Wipro, LTIMindtree, Tech Mahindra, Firstsource).

F. RISK LANDSCAPE

The IT - Software sector faces a multi-faceted risk landscape, encompassing macroeconomic, technological, regulatory, and competitive challenges. Companies are actively monitoring and mitigating these risks through strategic planning and operational adjustments.

**Industry-Wide Systematic Risks:** * **Global Macroeconomic Uncertainty:** Lingering uncertainties in the broader economic environment (TCS, Infosys, Wipro, Tech Mahindra, Persistent, Coforge, LTTS, Tata Elxsi, Zensar, Cyient). This leads to companies keeping tight control over discretionary budgets (TCS), muted discretionary spending (Infosys, Tech Mahindra, Wipro), and protracted decision cycles (Tata Technologies, LTTS). * **Geopolitical Tensions:** Unpredictable external environment (HCLTech, Coforge, LTTS, Newgen), Middle East turmoil (Newgen). * **Currency Fluctuations:** Impact on margins (TCS +80bps, Infosys +60bps, HCLTech +56bps, LTIMindtree +80bps, Persistent +60bps, Tata Elxsi +90bps, eClerx +200bps from FX in Q2). Hedging strategies are employed (LTIMindtree $4.11B, Tech Mahindra $1.33B, Persistent $475M). * **Cyber-threats:** Increasing sophistication, recent incidents impacted clients (TCS, Infosys, Tata Elxsi, LTTS, Tata Technologies). Companies are investing in cybersecurity solutions and responsible AI guardrails.

**Cyclicality and Economic Sensitivity:** * **Seasonality:** Q3 is typically softer due to furloughs and lower working days (TCS, Infosys, Wipro, LTIMindtree, Tech Mahindra, LTTS, Tata Elxsi, Happiest Minds, eClerx). * **Industry-specific cycles:** Auto sector slowdown (HCLTech, LTTS, Tata Elxsi), Communications growth headwinds (Infosys, Tech Mahindra), Hi-Tech budget cuts (Infosys). * **Discretionary Spending:** Highly sensitive to economic cycles. Muted for a while, but if it picks up, revenues improve (Tech Mahindra).

**Regulatory and Policy Risks by Geography:** * **H-1B Visa Issues:** US workforce dependence on visas is a concern, but companies are actively localizing and strengthening nearshore capabilities (Infosys, HCLTech, Wipro, Tech Mahindra, Persistent, Happiest Minds). H-1B visa fee revision is a manageable problem (HCLTech, Tech Mahindra). * **Tariff-related Uncertainties:** Impacting Retail clients (Infosys, Wipro), and potentially increasing cost of imported medical equipment (Sagility). * **HIRE Act 2025 (US):** Proposal for 25% excise tax on outsourcing payments to foreign entities (Sagility), though likelihood of implementation is low. * **Marketplace Integrity and Affordability Final Rule (US Healthcare):** Payers must upgrade systems, potential reduced membership/premium inflows for ACA-focused payers, shifts in patient coverage for Providers (Sagility).

**Technology Disruption Threats:** * **AI Impact on Existing Business:** Potential for revenue cannibalization due to AI-led productivity gains (HCLTech, Infosys, Wipro, LTIMindtree, Sagility, Newgen). This is seen as a "new normal" (LTIMindtree) and companies are proactively championing AI infusion to offset this. * HCLTech estimates BPO (40-50%), SDLC (25-30%), IT Ops/application support/maintenance (10-15%) could be impacted over time. * Clients are asking for greater savings in renewals due to AI (Wipro). * **New Entrants/Startups:** AI disruption from newcomers (Newgen). * **Customer Self-Deployment of AI:** Customers might deploy AI solutions themselves (Newgen).

**ESG and Sustainability Challenges:** * **ESG Goals:** LTIMindtree and HCLTech mention specific ESG goals (Net Zero by 2040, 40% women in workforce, diversity, community impact). * **Sustainability Segment:** LTTS and Coforge are seeing growth in this segment.

**Supply Chain Vulnerabilities:** * **Talent Supply Chain:** Competition for AI/specialized talent, attrition rates. * **Hardware/Software Dependencies:** For product companies, cost of hardware and software sold (HCLTech 1.9% of revenue).

**Competitive Threats (New Entrants, Substitutes):** * **Intense Competition:** Among IT Products companies (Intellect Design Arena). * **Pricing Pressure:** Due to high competition and client focus on cost.

**Customer Concentration Risks:** * **High Concentration:** Companies like IKS Health, Sagility, Tata Elxsi, LatentView Analytics have a significant portion of revenue from their top clients. * IKS Health: Top 3 Client 63.1%, Top 5 Client 74.4%, Top 10 Client 87.6%. * Sagility: Top 3 Client 63.1%, Top 5 Client 74.4%, Top 10 Client 87.6%. * Tata Elxsi: Top 5: 44.2%, Top 10: 54.7%. * LatentView Analytics: Top 5 Clients: 60%, Top 10 Clients: 74%. * **Mitigation:** Companies are actively trying to diversify their client base and reduce concentration (LTIMindtree, Tech Mahindra, Coforge, Persistent).

G. CAPITAL ALLOCATION & INVESTOR RETURNS

Companies in the IT - Software sector generally prioritize returning value to shareholders while strategically investing in growth, R&D, and M&A. Strong free cash flow generation is a hallmark of the industry.

**Capex Trends and Requirements (Growth vs Maintenance):** The IT services sector is generally asset-light, with capex primarily for facilities, IT infrastructure, and R&D labs. * **TCS:** Significant capex for new Sovereign AI datacenter subsidiary: 1 gigawatt over 5-7 years, ~$1 billion per 150-megawatt. This is a strategic growth investment. * **Intellect Design Arena:** Investing in a state-of-the-art 7.25 lakh sq. ft. facility for AI labs and academies. * **Persistent Systems:** Increased Capex on facility and IT (20 bps headwind on EBIT margin). * **Tata Elxsi:** Depreciation declining due to no new significant capex, indicating lower recent investments. * **eClerx Services:** Capex INR 336 Mn (Q2 FY26). * **LTIMindtree:** FCF to PAT will remain where it is due to continued capex investments, will gradually move up.

Most capex is for growth-oriented initiatives, particularly in AI infrastructure and specialized labs, rather than heavy maintenance.

**R&D Investment Levels as % of Revenue:** R&D is crucial for product companies and for developing AI-led solutions. * **Newgen Software:** 9% of revenues (Q2 FY26). * **IKS Health:** 4.7% of revenue (Q2 FY26), up from 3.86% (Q2 FY25). * **HCLTech:** Investing in differentiated IP. * **Intellect Design Arena:** Investing in eMACH.ai and Purple Fabric. * **Persistent Systems:** 20 new patents filed this quarter, total 75 for SASVA platform. * **LTTS:** Patent filings crossed 1,600 mark, 216 patents in AI/Gen AI. * **Coforge:** Filed 216 patents in AI & GenAI (overall patent count exceeded 1,600).

**Dividend Policies and Payout Ratios:** Companies generally have consistent dividend policies, reflecting strong cash generation. * **TCS:** Interim dividend ₹11 per share. Capital allocation policy: prioritize return of substantial free cash flow (80% to 100%) after all investments. * **Infosys:** Interim dividend ₹23 (9.5% higher YoY). Capital allocation policy: return 85% of free cash flow over a 5-year period. * **HCLTech:** Interim dividend ₹12 per share. 12-month payout ₹60 per share (95.7% of net income). * **LTIMindtree:** Interim dividend ₹22 per share (10% increase YoY). * **Tech Mahindra:** Dividend ₹15 per share. Committed to returning 85% and above of free cash flow. * **Persistent Systems:** Not explicitly stated, but strong FCF suggests capacity. * **Coforge:** Interim dividend ₹18 per share. * **LTTS:** Interim dividend ₹18 per share. * **PB Fintech:** No dividend mentioned, focus on growth and profitability. * **Sagility:** Interim dividend 0.05 or 5 paise per share. Quantum likely to go up as debt is extinguished. * **eClerx Services:** Board approved buyback of INR 300 crores. Capital allocation policy: return 50% of cash to shareholders over 12-18 months if not required. * **Cyient:** Interim Dividend INR 16 (highest ever).

**Share Buyback Programs:** * **Infosys:** Rs. 18,000 crores at Rs. 1,800 per share. * **eClerx Services:** INR 300 crores proposed buyback.

**M&A Activity and Strategy:** As discussed in Competitive Structure & Dynamics, M&A is used for strategic capability and market expansion. * **TCS:** Stepped up M&A efforts. * **Infosys:** Looking at other acquisitions. * **Tech Mahindra:** Programmatic M&A may take shape in future (tuck-in acquisitions). * **Wipro:** Harman DTS acquisition. * **Tata Technologies:** ES-TEC acquisition. * **Persistent:** Decision Point acquisition. * **Happiest Minds:** PureSoftware & Aureus acquisitions. * **IKS Health:** AQuity acquisition.

**Cash Generation and Free Cash Flow Profiles:** The sector is a strong generator of cash. * **TCS:** Net cash from operations $1.5 billion (110.1% of net income), FCF $1.4 billion. * **Infosys:** Free cash flow $1.1 billion (131% of net profit). * **HCLTech:** Operating Cash Flow (LTM) $2.62 billion, Free Cash Flow (LTM) $2.48 billion. * **Tech Mahindra:** Free cash flow $237 million (176% of PAT). * **Wipro:** Operating cash flows 104% of net income. * **LTIMindtree:** Operating cash flow to PAT ratio 85.6%, Free cash flow to PAT ratio 72.4%. * **Persistent Systems:** OCF $47.2M, FCF $37.5M (86% FCF/PAT). * **Coforge:** Q2 Free Cash Flow ₹445 crores. * **IKS Health:** FCF Yield 124.4%. * **eClerx Services:** Net operating cash flow INR 3,137 million. * **Cyient Group:** FCF INR 173 crores (117% FCF to PAT conversion). * **LatentView Analytics:** FCF INR 1,645 Mn. * **Happiest Minds:** DSO improved from 91 days to 88 days.

**Capital Efficiency Improvements:** Companies are continuously working on improving capital efficiency through better working capital management (DSO reduction), optimizing utilization, and focusing on high-ROIC projects. * **Infosys:** DSO down 2 days to 71 days. * **HCLTech:** Total DSO 78 days (improvement of 4 days QoQ). * **Tech Mahindra:** DSO decreased by one day QoQ. * **Persistent:** Billed DSO 54 days (2 days improvement QoQ). * **Coforge:** Combined DSO 114 days (reduction of 2 days QoQ). * **eClerx Services:** DSO 76 days. * **Cyient DET:** DSO 88 days (vs 91 days in Q1 FY'26).

H. FUTURE OUTLOOK & PROJECTIONS

The future outlook for the IT - Software sector is cautiously optimistic, with companies anticipating a gradual improvement in demand, driven primarily by the accelerating adoption of AI and continued digital transformation initiatives. While near-term macroeconomic uncertainties and seasonal factors will persist, the long-term structural trends remain favorable.

**Industry Growth Projections (with timeframes):** * **Infosys:** IT services industry growth expected to be higher next year if macro improves. * **HCLTech:** IT services industry growth next year: when macro improves, tech improves. * **Tech Mahindra:** Macro environment very slow, not expecting dramatic growth next year (but better than FY26). Fully expect to be better than FY '26 (higher growth for industry and self). * **IKS Health:** Outsourced market CAGR (2023-2028E) 12%. * **PB Fintech:** Without Savings, growth expected to remain 35-45%. Target ₹1 Tn premium (may be delayed by 1-2 quarters due to GST impact). Aspire for ~3% PAT as percentage of premium by FY30. * **Happiest Minds:** Raising growth commitment from 3 consecutive years of double-digit growth to 4 continuous years of double-digit growth (to FY'28).

**Management Guidance Across Companies (FY26 / FY27):** * **TCS:** FY26 International revenue growth expected to be better than last fiscal year (FY25 was 0.7% CC). Margins for rest of year to inch closer to 26%. Headcount reduction ~2% for the year. * **Infosys:** Revenue growth guidance (FY26) 2% to 3% in constant currency (tightened from 1%-3%). Operating margin guidance (FY26) 20% to 22% (remains same). H2 seasonally softer. * **HCLTech:** Full-year Services revenue growth guidance (FY26) 4%-5% in constant currency (raised). Company-level guidance (FY26) 3%-5% in constant currency (unchanged due to Software segment softness). Full-year EBIT margin guidance (FY26) 17%-18% (on track). * **Wipro:** Q3 IT services revenue growth: Minus 0.5% to plus 1.5% in constant currency. Operating margins: Endeavor to maintain in a narrow band of 17% to 17.5%. Growth outlook: Expect to sustain/improve beyond current organic growth. * **LTIMindtree:** Overall growth for H2: Endeavor to be nearer to double digit (USD terms). EBIT outlook: Remain confident in expanding margins. * **Tech Mahindra:** FY '27 goals: Consistent and steady progress. Margin goals: 15% (will calibrate between investments and returns). FY26 EBIT margin improvement: anticipate 100 bps. FY27 EBIT margin improvement: anticipate another 100 bps. * **Persistent Systems:** Steady progress towards aspiration of reaching $2 billion by end of FY27. FY26 EBIT margin improvement: anticipate 100 bps. FY27 EBIT margin improvement: anticipate another 100 bps. * **Coforge:** Expect both revenue and EBIT margins to see improvement in H2 compared to H1 of FY26. Aspire for double-digit growth in FY26. Reiterate medium-term outlook of USD 2 Bn revenue. Maintain aspirations of mid-16% EBIT margins between Q4FY27 and Q1FY28. * **Tata Elxsi:** H2 will be definitely much better than H1 (from automotive perspective). Next year (FY27): double-digit growth from transportation and healthcare businesses. Confident about meaningful 200-300 bps margin uptick over Q4FY27-Q1FY28. * **IKS Health:** Anticipate achieving a net debt-free position by Fiscal Year 2027. Expect to sustain organic growth in the low to mid-teens in constant currency. Increased revenue guidance (constant currency) to 21% plus (from earlier 20%). Increased adjusted EBITDA guidance to close to 25% (from earlier 24% plus) for full fiscal FY 2026. * **Tata Technologies:** Optimistic about the second half of fiscal year 2026. Anticipate some moderation in Q3, followed by a sharp recovery in Q4. Double-digit growth aspiration for FY26 will always be there, but focus is on building order book for double-digit growth in FY27. * **Firstsource Solutions:** FY26 guidance: 13-15% constant currency revenue growth. FY26 guidance: 11.25-12.0% EBIT margin. * **Sagility:** Expect to sustain organic growth in the low to mid-teens in constant currency. Increased revenue guidance (constant currency) to 21% plus (from earlier 20%). Increased adjusted EBITDA guidance to close to 25% (from earlier 24% plus) for full fiscal FY 2026. * **eClerx Services:** No change in overall margin outlook: expect margin to remain in 24% to 28% range for the year. Confident of delivering a higher ACV number this year compared to last year. * **Zensar Technologies:** Annual salary increments across geographies whilst maintaining margin in guided mid-teen range. * **Cyient (DET):** H2 for DET will be stronger than H1 (Revenue & Margin). EBIT target: 15% by Q4 FY'27. Cyient Semiconductors to stabilize burn by Q3 FY'26, become EBIT-neutral in FY'27. * **LatentView Analytics:** Upping revenue guidance (FY'26) to 19%-20% (from 18%-19%). Revenue Target (3-year timeframe, FY'28): $200 million-$220 million. EBITDA Margin (Full Year FY'26): 22%-23% (initially 23%-24%). * **Happiest Minds Technologies:** FY'26 Aspirations: Unchanged: deliver double-digit revenue growth in constant currency, sustain EBITDA margins in 20%-22% range. Expect gradual improvement in H2 operating margin/EBITDA.

**Emerging Opportunities and Whitespace:** * **AI-led Transformation:** The biggest opportunity, spanning all industries and service lines. Companies are positioning themselves as preferred partners for large-scale enterprise AI transformation (Infosys). * **Agentic AI:** Developing autonomous AI agents for complex tasks (Infosys, HCLTech, Tech Mahindra, IKS Health, LTTS, Newgen). * **Sovereign AI Datacenters:** TCS's bold move into AI infrastructure. * **Digital Battery Passports:** Tata Technologies WATTSync, LTTS Mobius+. * **US Reindustrialization:** Opportunities in discrete manufacturing, Medical and Pharma, high-end electronics (Coforge, LTTS). * **Public Sector:** Increased focus and opportunities in government projects (Infosys, HCLTech, LTIMindtree, Coforge, Newgen). * **Specialized Platforms:** Continued growth for companies offering niche, proprietary platforms (Intellect Design Arena, Newgen, IKS Health, Affle 3i). * **Cybersecurity Analytics:** New area for some (LatentView).

**Transformation Themes and Inflection Points:** * **AI-First Strategy:** Companies are embedding AI into every aspect of their operations and offerings. * **Consulting-led Approach:** Shifting from pure execution to strategic advisory and outcome-based solutions. * **Vendor Consolidation:** Clients are seeking fewer, more strategic partners, leading to larger, integrated deals. * **Localization & Nearshoring:** Reducing dependence on H1B visas and building local talent pools. * **Non-linearity:** AI-driven productivity is expected to lead to revenue growth outpacing headcount growth.

**Long-Term Structural Trends (5-10 year view):** * **Pervasive AI Adoption:** AI will become integral to all business processes and IT services. * **Data-Centric Architectures:** Demand for unified data fabrics and robust data engineering for AI. * **Hyper-Automation:** End-to-end automation of business processes, leveraging AI, RPA, and low-code platforms. * **Cyber Resilience:** Growing importance of advanced cybersecurity solutions. * **Sustainability & ESG:** Increasing client demand for sustainable solutions and responsible AI. * **Talent Reskilling:** Continuous need to reskill the workforce for new technologies.

**Potential Disruptions on the Horizon:** * **Rapid AI Evolution:** The pace of AI development could outstrip companies' ability to adapt, or new AI models could significantly reduce the need for certain services. * **Regulatory Changes:** Unexpected shifts in data privacy, AI governance, or immigration policies. * **Geopolitical Instability:** Escalation of conflicts or trade wars could severely impact global operations and client spending. * **Economic Downturn:** A prolonged global recession would dampen discretionary spending and IT budgets.

**Expected Margin Evolution:** * **Near-term (H2 FY26):** Margins are expected to remain under pressure due to wage hikes (Q3 impact for full quarter), increased investments in AI, and seasonal furloughs. However, companies aim to maintain or slightly improve margins through operational efficiencies, pyramid rebalancing, and strategic portfolio shifts. * **Medium-term (FY27-FY28):** Many companies project margin expansion, with targets ranging from 15% (Tech Mahindra) to mid-16% (Coforge, LTTS) to 26-28% (TCS aspirational band). This expansion is expected to come from: * **Operating Leverage:** As revenue grows, fixed costs are spread over a larger base. * **AI-led Productivity:** Efficiency gains from AI infusion in delivery. * **Offshoring Mix:** Increased offshore component in delivery. * **Higher Value Services:** Shift towards consulting-led, outcome-based, and specialized AI services. * **Cost Optimization Programs:** Continued focus on SG&A optimization and process simplification. * **Reinvestment:** Companies like Newgen and Cyient explicitly state that while margins would naturally expand, they prefer to reinvest those gains into sales, marketing, and R&D to accelerate growth.

I. COMPANY-BY-COMPANY PROFILES

Tata Consultancy Services Limited (TCS)

• **Company Name and Brief Description:** Tata Consultancy Services Limited (TCS) is a global leader in IT services, consulting, and business solutions. It is part of the Tata Group and is one of the largest IT services companies worldwide.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

Infosys Limited

• **Company Name and Brief Description:** Infosys Limited is a global consulting and IT services company, providing end-to-end business solutions to clients worldwide.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

HCLTech

• **Company Name and Brief Description:** HCLTech is a global technology company that helps enterprises reimagine their businesses for the digital age. It offers a comprehensive portfolio of services including IT, engineering, and business process outsourcing.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

Wipro Limited

• **Company Name and Brief Description:** Wipro Limited is a leading global information technology, consulting, and business process services company.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

LTIMindtree Limited

• **Company Name and Brief Description:** LTIMindtree Limited is a global technology consulting and digital solutions company formed by the merger of L&T Infotech and Mindtree.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

Tech Mahindra Limited

• **Company Name and Brief Description:** Tech Mahindra Limited is a specialist in digital transformation, consulting, and business re-engineering solutions, serving clients across various industries.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

Persistent Systems Limited

• **Company Name and Brief Description:** Persistent Systems Limited is a global digital engineering and enterprise modernization partner, specializing in software product development and technology services.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

Coforge Limited

• **Company Name and Brief Description:** Coforge Limited is a global digital services and solutions provider, specializing in cloud, data, automation, and AI.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

PB Fintech Limited

• **Company Name and Brief Description:** PB Fintech Limited operates Policybazaar and Paisabazaar, India's leading online platforms for insurance and lending products, respectively.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

L&T Technology Services Limited (LTTS)

• **Company Name and Brief Description:** L&T Technology Services Limited (LTTS) is a leading global pure-play engineering research and development (ER&D) services company, a subsidiary of Larsen & Toubro.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

Tata Elxsi Limited

• **Company Name and Brief Description:** Tata Elxsi Limited is a global design and technology services company, providing product engineering and design services across industries like Automotive, Broadcast, Communications, and Healthcare.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

IKS Health (Inventurus Knowledge Solutions Limited)

• **Company Name and Brief Description:** IKS Health is a healthcare enablement platform empowering provider organizations in the US to achieve optimized revenue and reduced expenses by delegating all chores across the patient journey.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

Tata Technologies Limited

• **Company Name and Brief Description:** Tata Technologies Limited is a global engineering and product development services company, specializing in automotive, aerospace, and industrial machinery.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

Affle 3i Limited

• **Company Name and Brief Description:** Affle 3i Limited is a consumer intelligence-driven global technology company that enables AI-led solutions in digital advertising, delivering consumer recommendations and conversions through relevant mobile advertising.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

Firstsource Solutions Limited

• **Company Name and Brief Description:** Firstsource Solutions Limited is a global provider of business process management (BPM) services, specializing in banking & financial services, healthcare, and communications, media & technology.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

Sagility Limited

• **Company Name and Brief Description:** Sagility Limited is a global business process management (BPM) company focused on the US healthcare payer and provider markets, offering services to improve efficiency and patient engagement.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

eClerx Services Limited

• **Company Name and Brief Description:** eClerx Services Limited is a knowledge process outsourcing (KPO) company providing data analytics, operations management, and process automation services to global clients, primarily in financial services, communications, and retail.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

Zensar Technologies Limited

• **Company Name and Brief Description:** Zensar Technologies Limited is a global digital solutions and technology services company, focusing on experience, engineering, and engagement.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

Intellect Design Arena Limited

• **Company Name and Brief Description:** Intellect Design Arena Limited is a global leader in financial technology, providing a full spectrum of banking and insurance products and platforms.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

Newgen Software Technologies Limited

• **Company Name and Brief Description:** Newgen Software Technologies Limited is a global provider of a unified digital transformation platform, NewgenONE, which includes low-code process automation, content services, and customer engagement management.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

Cyient Limited

• **Company Name and Brief Description:** Cyient Limited is a global engineering and technology solutions company, specializing in Design, Engineering, and Technology (DET) services, with a growing Design-Led Manufacturing (DLM) business and a new Cyient Semiconductors entity.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

LatentView Analytics Limited

• **Company Name and Brief Description:** LatentView Analytics Limited is a global digital analytics consulting and solutions firm, helping Fortune 500 companies make data-driven decisions.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY'26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

Happiest Minds Technologies Limited

• **Company Name and Brief Description:** Happiest Minds Technologies Limited is a global IT solutions company, focusing on digital transformation, cloud, cybersecurity, and AI, with an AI-led offshore model.
• **Scale Metrics:**
• **Financial Performance Summary (Q2 FY26):**
• **Strategic Priorities and Focus Areas:**
• **Competitive Advantages and Positioning:**
• **Key Metrics and KPIs:**
• **Management Outlook and Guidance:**
• **Recent Developments and Initiatives:**

J. TABLES

**Table 1: Q2 FY26 Revenue and Profitability Snapshot (USD Mn / % Margin)**

| Company | Revenue (USD Mn) | Revenue Growth (CC QoQ) | Revenue Growth (CC YoY) | Operating Margin (EBIT/EBITDA) | Net Income Margin (PAT) | | :---------------------- | :--------------- | :---------------------- | :---------------------- | :----------------------------- | :---------------------- | | TCS | 7,466 | 0.8% | 2.4% (reported) | 25.2% | 19.6% | | Infosys | ~4,740 | 2.2% | 2.9% | 21.0% | ~15.2% | | HCLTech | 3,644 | 2.4% | 4.6% | 17.5% | 13.3% | | Wipro | ~2,700 | 0.3% | -2.6% | 17.2% (Adj.) | ~11.9% | | LTIMindtree | 1,180.1 | 2.4% | 4.8% (reported) | 15.9% | 13.3% | | Tech Mahindra | 1,586 | 1.6% | -0.3% | 12.1% | 8.5% | | Persistent Systems | 406.2 | 4.2% | 17.6% | 16.3% | 13.2% | | Coforge | 462.1 | 5.9% | 25.7% | 14.0% | 9.4% | | Tata Elxsi | ~104.1 (INR 918.1 Cr) | 1.0% | -8.3% | 21.1% (EBITDA) | 16.0% | | IKS Health | 17% (YoY USD) | N/A | 17.0% | 35.0% (EBITDA) | 23.0% | | Tata Technologies | 150.9 | 4.5% | N/A | 16.4% (Adj. EBITDA) | 12.5% | | Affle 3i | ~73.4 (INR 6,467 Mn) | 4.2% | 19.1% | 22.6% (EBITDA) | 16.5% | | Firstsource Solutions | 265 | 2.0% | 13.8% | 11.5% | 7.8% | | Sagility | 189.4 | N/A | 20.0% | 26.2% (Adj. EBITDA) | ~16.5% | | eClerx Services | 115.5 | 5.4% | 16.3% | 28.8% (EBITDA) | 17.7% | | Zensar Technologies | 162.8 | 0.0% | 3.4% | 15.4% (EBITDA) | 12.8% | | Intellect Design Arena | ~89.5 (INR 789 Cr) | N/A | 34.0% (INR) | 23.0% (EBITDA) | 12.9% | | Newgen Software Tech. | ~45.5 (INR 4,008 Mn) | N/A | 11.0% (INR) | 25.5% (Adj. EBITDA) | 20.4% | | Cyient (DET) | 164.4 | 0.5% | -0.6% | 12.2% | 9.5% | | LatentView Analytics | 29.6 | 7.2% | 18.8% | 22.5% (Adj. EBITDA) | 16.6% | | Happiest Minds Tech. | 65.1 | 2.3% | 10.0% | 20.2% (EBITDA) | 16.0% |

*Note: Revenue figures are in USD Mn where available, otherwise converted from INR at average Q2 FY26 rates (e.g., 1 USD = 88.13 INR for TCS, 88.39 for Coforge/LTTS, 87.63 for HCLTech, 88.2 for Tech Mahindra, 88.78 for Persistent, 88.39 for Tata Elxsi, 87.63 for Newgen, 88.2 for Intellect, 87.63 for Affle, 87.2 for Sagility, 87.0 for Firstsource, 87.0 for Zensar, 87.0 for LatentView, 87.0 for Happiest Minds, 87.0 for IKS Health, 87.0 for PB Fintech, 87.0 for Tata Technologies, 87.0 for eClerx, 87.0 for Cyient). Some values are approximate based on available data.*

**Table 2: Key Operational Metrics (Q2 FY26)**

| Company | LTM Attrition (%) | Utilization (%) (Excl. Trainees) | Offshore Mix (%) | Total Headcount | TCV / Deal Wins (Q2 FY26) | | :---------------------- | :---------------- | :------------------------------- | :--------------- | :-------------- | :------------------------ | | TCS | 13.3 | N/A | N/A | 593,314 | $10 billion | | Infosys | 14.3 | 85 | ~60 (reduced onsite) | 332,000 | $3.1 billion | | HCLTech | 12.6 | N/A | N/A | 226,640 | $2.6 billion | | Wipro | 14.9 | N/A | 60.2 | N/A | $2.85 billion (large deals) | | LTIMindtree | 14.2 | 88.1 | 85.2 | 86,447 | $1.59 billion | | Tech Mahindra | 12.8 | 84.4 | 78.3 | 78,528 | $816 million | | Persistent Systems | 13.8 | 88.2 | N/A | 26,224 | $609.2 million | | Coforge | 11.4 | N/A | 52.3 | 34,896 | $514 million | | Tata Elxsi | 15.4 | >70 | 73.9 | 11,951 | N/A | | IKS Health | N/A | N/A | N/A | 12,940 | N/A | | Tata Technologies | 15.1 | N/A | 59.1 | 12,402 | 3 large deals closed | | Affle 3i | N/A | N/A | N/A | N/A | N/A | | Firstsource Solutions | 28.0 | N/A | 41.6 (Offshore & Nearshore) | 35,997 | 10 new logos | | Sagility | 26.3 | N/A | N/A | 44,185 | $34 million (ACV) | | eClerx Services | 20.3 | 75.1 | 81 (North America) | 21,415 | $46 million | | Zensar Technologies | 9.8 | 84.8 | 54.2 | 10,550 | $158.7 million | | Intellect Design Arena | N/A | N/A | N/A | 6,000+ | 18 new deals | | Newgen Software Tech. | N/A | N/A | N/A | ~4,500 | 15 new logos | | Cyient (DET) | 16.8 | 80.7 | N/A | 13,634 | 7 new logos | | LatentView Analytics | 22.0 | 84 | 81 (Offshore) | 1,670 | 3 new clients | | Happiest Minds Tech. | 17.4 | 80.7 | 87.5 | 6,554 | 30 new clients (H1) |

**Table 3: Geographic Revenue Mix (Q2 FY26, % of total revenue)**

| Company | North America / Americas | Europe / EMEA | India | APAC / ROW / Others | | :---------------------- | :----------------------- | :------------ | :---- | :------------------ | | TCS | 49.7 (Americas) | 28.4 (Europe) | 4.0 | 17.9 (MEA) | | Infosys | N/A | N/A | N/A | N/A | | HCLTech (Services) | 2.4 (USA) | 7.6 (Europe) | 0.6 | 17.9 (ROW) | | Wipro | 33.0 (Americas 1) + 29.6 (Americas 2) | 26.3 | N/A | 11.1 (APMEA) | | LTIMindtree | 74.2 | 14.7 | N/A | 11.1 | | Tech Mahindra | 49.8 | 25.4 | N/A | 24.8 | | Persistent Systems | 79.8 | 9.3 | 9.2 | 1.7 | | Coforge | 57.9 | 28.9 | N/A | 13.2 | | Tata Elxsi | 31.6 | 38.7 | 19.0 | 10.7 | | IKS Health | 100 (US focused) | N/A | N/A | N/A | | Tata Technologies | N/A | N/A | N/A | N/A | | Affle 3i | 26.1 (Developed) | N/A | N/A | 73.9 (India & Emerging) | | Firstsource Solutions | 69.4 | 29.4 | N/A | 1.2 | | Sagility | 100 (US focused) | N/A | N/A | N/A | | eClerx Services | 80 | 14 | N/A | 6 | | Zensar Technologies | 66.6 | 21.5 | N/A | 11.9 (Africa) | | Intellect Design Arena | 48 | 17 (GBP+EURO) | 15 | 8 (OTHERS) | | Newgen Software Tech. | 24 | 31 | 29 | 16 (APAC Ex-India) | | Cyient (DET) | 49.7 | 28.4 | 21.9 | N/A | | LatentView Analytics | 86.0 | 3.0 | N/A | 11.0 (APAC+Latam) | | Happiest Minds Tech. | 60.0 | 8.1 | 18.3 | 13.7 (APAC+ROW) |

**Table 4: Vertical Revenue Mix (Q2 FY26, % of total revenue)**

| Company | BFSI / Financial Services | Healthcare & Life Sciences | Manufacturing / Industrials | Technology & Communications | Retail & CPG | Others / Diversified | | :---------------------- | :------------------------ | :------------------------- | :-------------------------- | :-------------------------- | :----------- | :------------------- | | TCS | 1.1 | 3.4 | 1.6 | 1.8 | -1.0 | 0.8 (Comm. & Media) + 0.6 (Energy) + -1.1 (Regional) | | Infosys | N/A | N/A | N/A | N/A | N/A | N/A | | HCLTech (Services) | 11.4 | -3.0 | -1.8 | 13.9 (Tech) + 11.7 (Telecom) | 5.5 | 2.2 (Public Services) | | Wipro | 34.3 | 14.5 | 17.4 (EMR) | 15.6 | 18.2 | N/A | | LTIMindtree | 36.2 | 6.0 | 19.5 | 22.7 | 15.6 | N/A | | Tech Mahindra | 16.8 | 7.3 | 18.1 | 13.1 | 8.5 | 3.5 | | Persistent Systems | 34.8 | 25.2 | N/A | 40.0 (Software, Hi-Tech & Emerging) | N/A | N/A | | Coforge | 27.6 (BFS) + 15.1 (Insurance) | N/A | N/A | N/A | N/A | 23.3 (TTH) + 6.9 (Govt.) + 27.0 (Others) | | Tata Elxsi | N/A | 11.7 | 54.7 (Transportation) | 32.4 | N/A | 3.1 (System Integration) + 1.2 (Others) | | IKS Health | N/A | 100 (Healthcare focused) | N/A | N/A | N/A | N/A | | Tata Technologies | N/A | N/A | 81 (Automotive) + 19 (Non-Auto) | N/A | N/A | N/A | | Affle 3i | N/A | N/A | N/A | N/A | N/A | 100 (E, F, G, H Categories) | | Firstsource Solutions | 33.2 | 33.5 | N/A | 21.7 | N/A | 11.6 (Diverse Industries) | | Sagility | 88.5 (Payer) | 11.5 (Provider) | N/A | N/A | N/A | N/A | | eClerx Services | 41.4 | N/A | N/A | 25.9 (CMT) | 8.4 (Fashion & Luxury and Retail) | 16.7 (HiTech and M&D) + 7.7 (Emerging) | | Zensar Technologies | 43.6 | 11.2 | 25.2 | 20.0 | N/A | N/A | | Intellect Design Arena | 100 (FinTech focused) | N/A | N/A | N/A | N/A | N/A | | Newgen Software Tech. | 68 | 14 | N/A | N/A | N/A | 7 (Govt.) + 11 (Others) | | Cyient (DET) | N/A | N/A | 66.4 (Transportation & Mobility) | 52.5 (Networks & Infrastructure) | N/A | 45.1 (Strategic Units) | | LatentView Analytics | 14.0 | N/A | 6.0 | 62.0 | 18.0 | N/A | | Happiest Minds Tech. | 25.3 | 16.3 | 3.3 (Manufacturing) + 6.6 (Industrial) | 13.4 (Hitech) + 9.6 (TME) | 9.8 | 15.3 (Edutech) + 0.4 (Others) |