Wipro and Tech Mahindra Surpass Larger Rivals in Third Quarter
India's information technology sector witnessed an interesting shift during the October-December 2025 quarter. Wipro and Tech Mahindra, companies that have traditionally trailed behind their larger competitors, managed to outperform both Tata Consultancy Services and Infosys. This happened during what is typically a seasonally weak period for the industry.
Revenue Performance Shows Clear Divergence
Wipro reported quarterly revenue of $2.64 billion. This represents a sequential growth of 1.19% and a modest yearly increase of 0.23%. The company's banking segment played a crucial role in this performance. Banks contributed more than three-fifths of Wipro's incremental revenue, even though they constitute just over one-third of its total business.
Tech Mahindra delivered even stronger results. The company posted third-quarter revenue of $1.61 billion, marking its best third-quarter performance in three years. This represents a 1.5% sequential increase and a solid 2.74% growth compared to the same period last year. Telecom companies drove more than half of Tech Mahindra's growth during the quarter, despite accounting for only one-third of its business.
How Other Major Players Fared
The broader picture for India's top IT firms reveals varied performances:
- TCS reported revenue of $7.51 billion with 0.6% sequential growth
- Infosys posted $5.1 billion in revenue with 0.5% sequential growth
- HCL Technologies showed the strongest growth at 4.1% sequentially to reach $3.79 billion
Both Wipro and Tech Mahindra exceeded market expectations. Bloomberg polls had anticipated Wipro to report $2.6 billion and Tech Mahindra $1.57 billion for the quarter.
Profitability and Margin Performance
Operating margins told another positive story for the outperforming companies. Wipro reported operating margins of 17.6%, representing a 90 basis point improvement. Tech Mahindra's margins reached 13.1%, showing a 100 basis point increase.
In contrast, TCS maintained flat margins at 25.2% while Infosys saw a significant decline of 260 basis points to 18.4%. HCLTech was the only top-three company to expand margins, improving by 110 basis points to 18.6%.
Management Perspectives on Market Conditions
Company leaders offered cautious but distinct views on the demand environment. Wipro CEO Srinivas Pallia noted a strong pipeline across sectors and markets but emphasized careful monitoring of discretionary spending. Tech Mahindra CEO Mohit Joshi observed that the demand environment has strengthened slightly, describing it as more stable though not dramatically changed.
Tech Mahindra secured a significant deal worth over $500 million from an unnamed European communications provider. Management described this as their largest deal in Europe, a region that contributes one-fourth of their business.
Labor Code Impacts and Headcount Changes
The implementation of new labor codes affected all major IT companies. These regulations increased basic pay for employees and raised statutory payouts like provident fund and gratuity. The upfront costs varied significantly:
- TCS faced $238 million in costs
- Infosys incurred $143 million
- HCLTech reported $109 million
- Wipro recorded $33.3 million
- Tech Mahindra saw $30 million in costs
Headcount changes showed mixed trends across the industry. TCS, HCLTech, and Tech Mahindra reduced their workforce by 11,151, 261, and 3,098 employees respectively. Meanwhile, Infosys and Wipro added 5,043 and 6,529 employees during the quarter.
Artificial Intelligence Revenue and Future Outlook
Artificial intelligence continues to emerge as a growth area, though only two companies shared specific revenue figures. TCS reported $1.8 billion in annualized AI revenue as of December 2025, while HCLTech disclosed $146 million from advanced AI in the last quarter. All companies expressed expectations for increasing AI revenues in coming periods.
Tech Mahindra's Joshi emphasized that AI remains a strategic growth pillar, with clients moving from experimentation to execution at scale. The technology is increasingly embedded across large enterprise engagements.
Looking Ahead to Fiscal Year End
The current fiscal year presents different challenges for the outperforming companies. Tech Mahindra appears positioned to reverse its trend of revenue decline and end the year with growth. Wipro faces a more challenging path, needing 1.86% sequential dollar revenue growth in the January-March quarter to avoid a full-year decline. This would represent its best fourth-quarter performance in four years.
Wipro's management has projected fourth-quarter revenue between $2.64 billion and $2.69 billion. However, investors reacted negatively to the company's outlook, with Wipro shares falling 6% to $2.79 during pre-market trading on the New York Stock Exchange.
Market analysts noted that weaker-than-expected guidance for the fourth quarter likely contributed to the share price decline. Despite this reaction, the third-quarter performance demonstrates that smaller players can sometimes outperform their larger counterparts even during challenging market conditions.
