IT Q1 FY27: AI theme has two faces

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Q1 FY27 was the quarter Indian IT started reporting AIs impact in its P&L.

Wage hikes impacted everywhere at once, while growth stayed muted across companies.

Management spent most of their concalls explaining where

1. HCLTech’s Advanced AI revenue grew 62% YoY.

2. Infosys’s AI revenue is now 8.2% of the company and growing in double digits for several quarters.

3. Coforge has built its entire growth thesis around AI-led engineering which is now over half its revenue mix.

1. Infosys’s CFO used the words “AI led deflation” to describe a new pricing headwind.

2. Wipro’s CEO acknowledged that traditional, commoditized work is seeing real margin pressure as AI compresses budgets.

3. HCLTech now explicitly splits its book into AI-native and AI-amplified services (growing fast) versus AI-disrupted services (traditional work being optimized away).

Tech Mahindra led on constant growth this quarter, helped by large deal ramp-ups. Wipro and HCLTech were the only ones to shrink QoQ.

_{¹ Persistent does not separately disclose constant-currency growth; figure shown is reported USD QoQ growth.
² Coforge’s organic CC growth excluding exited businesses was 5.2% QoQ; the 1.1% figure includes planned exits (a $15M India government portfolio and a $4M data-center divestment). Reported growth including two months of Encora was +21.1% QoQ, which is M&A, not organic performance.}

TCS and Wipro both took roughly 130bps of QoQ margin compression, and both blame the same thing: annual wage hikes landing in Q1.

Persistent’s dip is a forex loss rather than a structural cost issue.

_{¹ TCS and Wipro both cite annual wage increments as the primary driver.
² HCLTech’s reported figure includes 62bps of restructuring cost; ex-restructuring EBIT margin was 17.5%.
³ Persistent’s PAT margin fell a sharper 180bps QoQ to 11.2%, which management attributed to forex losses rather than operations.
⁴ Coforge’s organic EBIT margin (ex-Encora) was 16.7%, up 486bps YoY; PAT margin fell 438bps QoQ to 9.4% on acquisition-financing interest and forex costs.}

TCS added over 9,000 people despite a flat quarter in dollar revenue.

Attrition is low and getting lower almost everywhere which could be

_{¹ Coforge’s headline number includes 9,256 employees who joined via the Encora acquisition; organic net add was +1,195. Infosys added over 2,000 from acquisitions before a 500-person net reduction elsewhere.}

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