As BFSI and healthcare sectors tighten digital spends amid a larger slowdown, the share of revenue from manufacturing and allied sectors has been increasing for the Indian IT services players.
Three of the five top tier Indian IT services players have seen an increase in share of revenue from the manufacturing vertical over the past 3 fiscals, data from company’s annual reports. However, as supply chain strains and geopolitical and trade wars dominate the global landscape, the revenue from manufacturing clients is set to see some dampening, experts say.
In FY25, manufacturing accounted for 15.5 per cent of Infosys’s overall revenue, up from 12.9 per cent in FY23. Similarly, Tech Mahindra saw the sector’s contribution to its topline rise from 15.7 per cent to 17.3 per cent during the same years. In case of TCS, the share of revenue from manufacturing saw a relatively modest growth from 9.4 to 9.9 per cent. Meanwhile, Wipro and HCLTech saw decline in this share, from 18.4 per cent to 17.2 per cent and from 19.1 per cent to 18.5 per cent, respectively. Wipro counts energy and utilities along with manufacturing.
Commenting on the trend, Nishant Udupa, Practice Director, Everest Group says that manufacturing players have undergone IT heavy transitions in recent years. “The increase in revenue from the manufacturing vertical has been driven by multiple factors, including smart factory, Industry 4.0 initiatives and manufacturing platform modernisations.” He also added that certain geopolitical factors in the past, including supply chain optimisations could have also played a role.
Gaurav Vasu, Founder and CEO, UnearthInsight suggests that the Top 5 IT services firms have been focusing on increasing manufacturing revenue in Europe and the Rest of the World. This includes Southeast Asia, which continues to be a very significant market for these companies.
Slowdown Risks
According to Vasu, the immediate impact of manufacturing headwinds remains limited, but a geopolitical slowdown could dampen consumption, reducing discretionary spending and impacting the tech services industry. He added that the share of manufacturing is likely to stagnate for the Top 5 IT firms. The results of such a downtrend will be monitored over the next two quarters, he said.
Meanwhile, the S&P Global Sector PMI data indicated a challenging end to the first quarter of the year among manufacturing-based sectors. The data also indicated that the Automobiles & auto parts manufacturing sector, a key sub vertical for Indian IT, suffered their steepest global output drop since November 2022.
Sumit Pokharna, VP-Fundamental Research, Kotak Securities believes that the manufacturing vertical is facing the most headwinds as of now. “Infosys has flagged auto, industrials and Europe under particular pressure with slower decisions and weaker discretionary spends. TCS and Tech Mahindra also reported spending cuts in the automotive sector while Wipro said that tariffs have weighed on demand, though cost-cutting programmes are creating some opportunities.”
Tarriffs on India unlikely to play a role
However, most analysts believe that the US Government’s proposed 50 per cent tariff on Indian goods will have little to no impact on the manufacturing vertical. “The bulk of this revenue for Indian IT comes from the US and Europe, and is therefore unlikely to be heavily impacted by tariffs on India (though there will undoubtedly be a trickle-down impact as costs rise),” Udupa said. “There will be some manufacturing reshoring initiatives and net-new greenfield investments, which will also create opportunities for IT providers.”
According to Vasu, India contributes less than 4–5 per cent of total revenue for Big IT, with manufacturing forming an even smaller share. TCS, however, is an outlier due to revenue derived from Tata group, he added.
Published on August 18, 2025