Why did IT stocks fall today after Accenture Q3 results? Analysts decode

IT stocks today: Accenture's Q3 results show that the adverse macro environment has started impacting clients' tech spending decisions, which may hit IT stocks in the near-term

IT stocks today: After several quarters of robust deal wins, global consulting major Accenture signalled early signs of client hesitation in its third-quarter results for Q3FY25 — a development that analysts believe could challenge Indian IT companies in the coming quarters.

 

Last week, Accenture reported Q3FY25 revenue of $17.7 billion, marking a year-on-year (Y-o-Y) growth of 7 per cent in constant currency (CC) terms and 7.7 per cent in US dollar terms, meeting the upper end of its guided 3–7 per cent range.

 

However, deal bookings — a key forward-looking indicator — fell 6.5 per cent Y-o-Y to $19.7 billion. Consulting bookings dropped 2.2 per cent Y-o-Y, while outsourcing bookings declined sharply by 9.8 per cent Y-o-Y.

 

"Outsourcing revenue grew 9 per cent Y-o-Y (CC), but the momentum has slowed following two quarters of double-digit growth. Meanwhile, outsourcing deal bookings fell for a third consecutive quarter, with a steeper 10 per cent Y-o-Y decline in Q3. Both trends signal increasing caution among clients, which is concerning for Indian IT services firms," said Pritesh Thakkar and Sujay Chavan of PL Capital.  CATCH STOCK MARKET LATEST UPDATES TODAY LIVE

 

Kotak Institutional Equities echoed this concern, noting that their industry checks point to a slowdown in net new deal wins and heightened vendor consolidation activity.

 

“We believe the current environment is not supportive of strong deal wins across the board. Accenture’s restructuring around the ‘reinvention’ theme may intensify competition in large deals, which is a potential negative for Indian IT companies,” the brokerage noted.

 

Consequently, the Nifty IT index fell 1.8 per cent intraday to 38,279, eventually closing 1.48 per cent lower at 38,414. Oracle Financial Services, Infosys, HCL Tech, TCS, and Wipro were among the top losers. By comparison, the broader Nifty 50 ended 0.56 per cent lower.

 

Another aspect of Accenture's Q3 update was the deceleration in deal activity in its Generative AI (GenAI) segment. With over 40 per cent of its global workforce based in India, trends in Accenture’s GenAI vertical are seen as an important signal for the broader Indian tech industry.

 

Analysts said that while GenAI bookings continue to grow, the pace has moderated. This could prove a mixed bag for Indian IT companies, where gains from new GenAI use cases may be offset by headwinds in software development and business process outsourcing over the next three years. 

 

Accenture acknowledged that clients are grappling with elevated uncertainty, which is weighing on the adoption of new technologies like GenAI.

 

For Q4FY25, Accenture has projected revenue growth of 1–5 per cent Y-o-Y (CC). It also raised the lower end of its FY25 revenue guidance to 6–7 per cent (from 5–7 per cent). Adjusting for a 3 per cent inorganic growth contribution, this implies an organic growth range of 3–4 per cent CC for the year.

 

Analysts at HSBC said Indian IT companies grew by 3–4 per cent in FY24–25, but headwinds including a high base, GCC expansion, mid-tier market pressures, GenAI uncertainty, and a weak macro backdrop are likely to constrain momentum into FY26 as well.

 

Nomura noted that while demand has not worsened significantly since the US paused new tariffs in early April, a robust revival will depend heavily on macroeconomic improvement, particularly in the US. The brokerage prefers Infosys among largecaps and Coforge among midcaps.

 

JM Financial advised investors to focus on stocks with relative valuation comfort — highlighting TCS, Infosys, Mphasis, and Sagility India. Kotak Institutional Equities' top picks include Tech Mahindra, Infosys, Coforge, Hexaware, and Indegene.