As Accenture sounds DOGE alarm, Indian IT relatively better insulated, analysts say

As IT main Accenture cautioned final week that tightened US federal spending beneath DOGE was impacting its income, business analysts word that Indian IT companies, who’ve a big Western market, might not be as badly impacted.

Prime-tier Indian IT gamers like TCS, Infosys and others do work with choose US state governments, and likewise Federal businesses in some instances, however have lower than 2 per cent of their revenues coming from authorities contracts within the US, analysts instructed businessline. In distinction, Federal revenues made up roughly 16 per cent of Accenture’s Americas revenues in FY2024.

• Additionally learn: Accenture outcomes fallout: Indian IT companies brace for a muted FY26 amid sluggish discretionary spending

“The spending cuts beneath DOGE have induced important uncertainty in providers business. The direct influence on Indian service suppliers is decrease than US public sector heavy international friends. A tough estimate of income combine from US public sector enterprise for choose group of Indian service suppliers can be between 0.5 per cent and a pair of per cent of topline,” Prashant Shukla, Vice President, Everest Group, mentioned. “Having mentioned that, any discount in general spend usually has a cascading impact on aggressive depth of a market,” he added.

“US Federal/ Public sector consulting and know-how price range cuts wouldn’t influence Indian IT providers business as they’ve decrease income from the identical. Additionally Indian IT providers have restricted know-how consulting and virtually non-existent administration consulting revenues from US Federal govt,” Gaurav Vasu, founding father of analysis agency UnearthInsight mentioned. Like Accenture, it’s consulting companies like McKinsey, BCG, Bain and Big4 companies which have a bigger publicity to the US public sector, he added.

Analysts additionally word that Indian IT offers with US authorities businesses which can be each small and likewise tightly priced, so they could not come beneath the purview of DOGE cuts. As an example, the Delaware Division of Labor chosen Infosys Public Providers, an Infosys subsidary, to modernise its labour methods in July 2024. Equally, TCS additionally received a deal to digitally rework the Georgia Division of Labor’s IT methods in 2023. These offers could also be a lot decrease than $50 million in deal dimension, business insiders word.

Nonetheless, US-based Cognizant (which has a big worker presence in India) is more likely to have relatively larger publicity to the US authorities enterprise, because of a latest acquisition. In 2024, Cognizant acquired Belcan, a digital engineering and IT providers supplier primarily to the aerospace, defence, marine and authorities providers markets within the US and UK. On the time of acquisition, analysts mentioned that Belcan was producing about $800 mm in income run charge, of which 40 per cent got here from the Federal authorities. As per the Belcan web site, it’s a accomplice to over 40 US Federal businesses.

Cognizant didn’t reply to businessline’s queries.

• Additionally learn: BFSI and healthcare to steer Indian IT restoration as bellwether Accenture upgrades FY25 outlook

Evaluation of the US Finances paperwork for fiscal yr 2025 exhibits that the federal government has proposed $75 billion of Federal IT spending by civilian businesses in fiscal yr 2025. That is virtually flat from 2024, and majority is put aside for the ‘IT Infrastructure, IT Safety and IT Administration.’ For the US, October to September is the fiscal yr.

Ramkumar Ramamoorthy, Companion at Catalincs, a tech development advisory agency says that short-term uncertainty is anticipated as a result of initiatives of DOGE however additionally it is more likely to open up reallocation of IT spending for modernising methods, leveraging AI for reworking operations and constructing cyber resilience.“ These measures ought to drive newer alternatives, particularly for agile, small and medium know-how firms that aren’t wedded to legacy playbooks,” he mentioned.