Indian IT Services: One-off client issues are structural at sector level

Research evidence excerpt

Indian IT Services: One-off client issues are structural at sector level

3 August 2026

Equities

IT Services Indian IT Services

One-off client issues are structural at sector level India

◆ Client-specific issues are lot more frequent in the sector now, Yogesh Aggarwal*

implying lower IT vendor switching costs Head of Research, India

HSBC Securities and Capital Markets (India) Private Limited

yogeshaggarwal@hsbc.co.in

◆ Diminishing benefit of size (vendor), AI assistance and higher +91 22 2268 1246

churn in the enterprise (buyer) are leading to higher switching Prateek Maheshwari*, CFA

Analyst, India IT Services

◆ Sector investment thesis remains contingent on global AI prateek.maheshwari@hsbc.co.in

narrative and long-term impact of AI on Indian IT +91 98 1937 0718

Sagar Desai*

Client-specific “one-off” issues have become increasingly common across the IT HSBC Securities and Capital Markets (India) Private Limited

sagar.desai@hsbc.co.in

services sector over the past few years. More frequently, companies are reporting +91 83 6919 9927

unexpected quarterly underperformance driven by idiosyncratic client events –

typically contract terminations or, more often, project losses to competitors. At a * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

not registered/ qualified pursuant to FINRA regulations

sector level, we don’t believe these should be treated as true one-offs, as every

provider is exposed to such incidents at different points in time.

Several major vendors – including TCS, HCLT, INFY, Wipro and LTM – have

reported similar events in recent years (Exhibit 1). We see important implications and

read-across for the sector.

◆ First, the IT services model was historically viewed as highly “sticky”, but that

assumption is weakening.