Robust outsourcing demand from Europe helped cushion revenue growth in at least three of India’s top six software services exporters during the June quarter.
HCLTech, LTIMindtree, and Tech Mahindra gained new business from European clients, marking a revival for the region after three quarters of deal slowdown. Overall revenues in these companies rose in low single digits in the three months ended June.
“Europe has become an interesting case of late. It is starting to build tech capabilities to maintain its tech sovereignty, which at the moment is heavily US dependent…There is some regionality in the recovery of IT spend in Europe in the first half of calendar year 2025,” said Ashutosh Sharma, vice president and research director at US-based research and advisory firm Forrester.
He said UK, Ireland, and Benelux (Belgium, the Netherlands, and Luxembourg, three neighboring countries in Western Europe) are doing fairly well even as other major economies such as France and Germany have stayed mostly flat or slowed down.
Deal momentum has picked up pace, especially in cloud, generative AI, digital and cybersecurity, experts said.
In June, ET reported that deal activity increased about 5% sequentially from Europe after three quarters of sluggishness. Europe comprises around 20-30% of market for top tier IT firms while US is at 40-50%.
The recovery in deal activity comes at a time when the US, the world’s largest technology outsourcing market, navigates trade and tariff-led policy uncertainties.
In Europe, after 17 deals signed during October to December 2024, the momentum accelerated to 30 in the March quarter, showed a BNP Paribas report based on publicly available key large deals. A total of 14 deals were signed in Europe this April and May.
Based on Q1FY26 earnings, HCLTech, India’s third-largest IT company, recorded a 9.6% growth in constant currency terms in Europe, the second-fastest pace among regions globally.
For industry leader Tata Consultancy Services (TCS), while Europe contracted due to a slowdown in banking and financial services (BFS) sector, insurance demand improved. TCS also announced at least two large deals in the region—one each a large pharmaceutical and agrochemical company, and a transport company. In fact, since March, TCS has signed at least six deals in Europe.
Smaller rival Tech Mahindra reported double digit on-year growth in the June quarter, while LTIMindtree garnered nearly three-fourths of its incremental revenue from European clients.
Tech Mahindra CEO Mohit Joshi told ET that the fifth-largest IT company is experiencing a huge amount of dynamism in Europe over the past 3-4 months.
“Most of the companies in the sectors in Europe have traditionally been a little bit lagging in terms of technology,” said Joshi. “We have a lot of micro businesses in Europe, which gives us a lot of capabilities in Europe.”
Larger peer Wipro faced headwinds in Europe but is optimistic on the deal pipeline from the BFSI sector including a large deal with Phoenix won in the March quarter. Infosys is slated to announce 1QFY26 results on Wednesday.
Sharma at Forrester pointed out that Europe may not have many sectors to power its growth engine, except a few like manufacturing in Germany; shipping, logistics in northern Europe, and financial services within the continent.
“However, these are still large and globally well-connected economies and will have a good appetite for tech in the foreseeable future. So, at least in 2026, we will see this growth to remain unless there are external factors such as war of any kind,” he said.
HCLTech, LTIMindtree, and Tech Mahindra gained new business from European clients, marking a revival for the region after three quarters of deal slowdown. Overall revenues in these companies rose in low single digits in the three months ended June.
“Europe has become an interesting case of late. It is starting to build tech capabilities to maintain its tech sovereignty, which at the moment is heavily US dependent…There is some regionality in the recovery of IT spend in Europe in the first half of calendar year 2025,” said Ashutosh Sharma, vice president and research director at US-based research and advisory firm Forrester.
He said UK, Ireland, and Benelux (Belgium, the Netherlands, and Luxembourg, three neighboring countries in Western Europe) are doing fairly well even as other major economies such as France and Germany have stayed mostly flat or slowed down.
Deal momentum has picked up pace, especially in cloud, generative AI, digital and cybersecurity, experts said.
In June, ET reported that deal activity increased about 5% sequentially from Europe after three quarters of sluggishness. Europe comprises around 20-30% of market for top tier IT firms while US is at 40-50%.
The recovery in deal activity comes at a time when the US, the world’s largest technology outsourcing market, navigates trade and tariff-led policy uncertainties.
In Europe, after 17 deals signed during October to December 2024, the momentum accelerated to 30 in the March quarter, showed a BNP Paribas report based on publicly available key large deals. A total of 14 deals were signed in Europe this April and May.
Based on Q1FY26 earnings, HCLTech, India’s third-largest IT company, recorded a 9.6% growth in constant currency terms in Europe, the second-fastest pace among regions globally.
For industry leader Tata Consultancy Services (TCS), while Europe contracted due to a slowdown in banking and financial services (BFS) sector, insurance demand improved. TCS also announced at least two large deals in the region—one each a large pharmaceutical and agrochemical company, and a transport company. In fact, since March, TCS has signed at least six deals in Europe.
Smaller rival Tech Mahindra reported double digit on-year growth in the June quarter, while LTIMindtree garnered nearly three-fourths of its incremental revenue from European clients.
Tech Mahindra CEO Mohit Joshi told ET that the fifth-largest IT company is experiencing a huge amount of dynamism in Europe over the past 3-4 months.
“Most of the companies in the sectors in Europe have traditionally been a little bit lagging in terms of technology,” said Joshi. “We have a lot of micro businesses in Europe, which gives us a lot of capabilities in Europe.”
Larger peer Wipro faced headwinds in Europe but is optimistic on the deal pipeline from the BFSI sector including a large deal with Phoenix won in the March quarter. Infosys is slated to announce 1QFY26 results on Wednesday.
Sharma at Forrester pointed out that Europe may not have many sectors to power its growth engine, except a few like manufacturing in Germany; shipping, logistics in northern Europe, and financial services within the continent.
“However, these are still large and globally well-connected economies and will have a good appetite for tech in the foreseeable future. So, at least in 2026, we will see this growth to remain unless there are external factors such as war of any kind,” he said.
