Bad news for Ratan Tata’s TCS, Azim Premji’s Wipro due to…, tough times ahead for IT giants because…
Trump Tariffs: US President Donald Trump’s reciprocal tariffs, has sparked the threat of a US-China trade war, and triggered pandemonium across global markets, and it seems that even India’s thriving IT services sector is not immune to the fallout as the country’s top IT firms, Tata Group’s Tata Consultancy Services (TCS), and Azim Premji-led Wipro, recently expressed uncertainty over the annual salary hike of their employees.
“We had spoken about improving market sentiments and early signs of discretionary spending revival in January. This was not sustained due to many of the discussions around tariffs. We are observing delays in decision-making and project starts with respect to discretionary investments,” TCS CEO K. Krithivasan, told reporters at a presser on April 10, a day after Trump announced a 90-day pause on his retaliatory tariffs on all countries barring China.
Wipro CEO Srinivas Pallia expressed similar sentiments about salary hikes in FY26, saying the company will make a decision on the matter “closer to the date”. Pallia said that Trump tariffs against China have “dramatically increased” uncertainties in the services sectors, and could hurt Wipro’s European clients in the coming future.
WTO revises growth forecast for services sector
On Wednesday, World Trade Organization (WTO) revised its earlier growth forecast in services sector, stating that the commercial services trade is now expected to grow by 4 percent in 2025 and 4.1 percent in 2026, against the earlier baseline projections of 5.1 percent and 4.8 percent, respectively.
The WTO said the ongoing US-China trade war is likely to deal a heavy blow to the global services sector as tariff-induced declines in goods trade weaken demand for related services such as “transport and logistics”, while broader uncertainty dampens “discretionary spending” on travel and slows investment-related services.
“The recent downturn in trade prospects follows a strong performance in 2024, when the volume of world merchandise trade grew by 2.9 per cent and commercial services trade expanded by 6.8 per cent,” the apex trade body said, noting that the global merchandise exports surged by 2 percent to $24.43 trillion, which indicates a decline in average export and import prices.
Commercial services exports rose by 9 percent to $8.69 trillion, reflecting strong demand across a range of sectors, it said.
International travel to slow down
As per the WTO report, the economic uncertainty will slow down demand for international travel, especially for leisure, due to external factors like economic conditions, political stability, health or safety concerns, or unfavourable exchange rates.
“Travel could be the first sector, therefore, to be affected by economic uncertainty. Consumers may decide against trips and room reservations abroad if accommodation or flight prices increase, as this is discretionary spending. Although less prone to fluctuation, education- and health-related travel could still see a shift toward alternative destinations, for example, in response to changes in visa policies,” the WTO said.
Tighter regulations on IPs
The global trade body also warned that trade tensions could lead to tighter regulations on intellectual property licensing, limiting the growth of digitally delivered services such as streaming, online gaming, and remote education platforms, thereby reducing export revenues for their providers.
“Financial services may also be affected, as the uncertain economic context can translate into lower investment and fewer transactions, including by consumers through credit cards,” the report said.
Threat to TCS, Wipro, Infosys
Tata Consultancy Services (TCS) is India’s largest IT services exporter, and the world’s most valuable IT company by market capitalization, surpassing other major players like Accenture, Infosys, and Cognizant. Meanwhile, billionaire Azim Premji-led Wipro is the the fourth-largest IT services firm in India, boasting a diverse portfolio, that includes digital transformation, cloud computing, and data analytics.
Notably, in 2024, India ranked as the eighth-largest exporter of commercial services worldwide, with a 4.3 percent share in services exports valued at $374 billion. India’s IT services giants like Wipro, TCS, and Infosys rely on global revenues, and the current economic scenario triggered by Trump’s tariff war, is a bad omen for these firms
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