Top four IT companies log 40% drop in large client additions in FY23

Top four IT majors, Tata Consultancy Services (TCS), Infosys, HCLTech and Wipro, added 80 large clients which are classified as deals in the $10 million to $100 million range in the fiscal ending 2023 versus 132 clients in FY22, according to ET’s analysis.

The firms did not respond to ET’s request for comment on the trend.

According to ET’s data, Infosys is the only company whose net client addition remained flat in FY23 at 23 for the year. All other companies added fewer clients.

The Tata Group firm added 33 clients in the $10 million range last year. The numbers fell from 52 in the previous year. TCS saw a 57.7% drop in the same period, followed by Wipro’s fall of 48.1% on year as its number of clients added fell to 14 from 27 in FY22. Similarly, HCLTech witnessed a 30% drop in large client additions as it fell 21 from 30 in the year-ago period.

Weak macros

Discover the stories of your interest

Analysts and industry experts point to the slowdown in discretionary spending and weak macros compared to the demand upcycle last year as the reason for the fall in client additions.

“Transformational spending will continue now that technology is central to every company’s strategy. But given the macro environment, companies are slowing discretionary spending. This is why we continue to see strong demand for outsourcing, mixed with softened demand for consulting and project-based work,” said Namratha Dharshan, chief business leader of India Research at global tech research firm ISG.

Managements like HCLTech and LTIMindtree have noted that clients were prioritising projects that give them faster returns or looking at cost-saving deals to reinvest them into transformation projects.

Dharshan of ISG also pointed out that clients have turned cautious on spending given the macroeconomic conditions. “They are certainly looking for greater return on investment and are keen on value adds. But it is part and parcel of all transformation projects too,” she added.