Bengaluru-based Infosys Ltd grew faster than city-based rival Wipro Ltd in July-September on the back of higher business from clients in Europe, signalling higher growth for the coming quarters.

Infosys reported $4.894 billion in revenue in the second quarter, a 3.8% sequential increase and a 3.7% growth from a year ago. Much of this growth came from Europe, which contributed $117 million, or 65%, of the company’s $180 million incremental revenue.

A visibly happy Salil Parekh, the chief executive of Infosys, attributed the company’s performance to a strong showing by clients in the banking and financial services sector during the company’s post-earnings press briefing on Thursday.

“There are specific factors for the growth… it’s really more focused on the traction we saw on financial services, and then (in) each of the others we have seen quarter-on-quarter growth, except for retail,” said Parekh.

Also read | Infosys may lead Indian IT pack this festive season

Infosys earned $1.33 billion in revenue from financial services, contributing almost a fifth to its incremental revenue.

Infosys raised its guidance to 3.75-4.5% in constant currency terms for the 12 months through March 2025—its seventh growth guidance revision in eight quarters. The management had outlined a 3-4% growth in constant currency terms after the April-June quarter.

Infosys reported a second-quarter profit of $778 million, up 1.83% from the June quarter and 3.6% higher from a year earlier. Analysts surveyed by Bloomberg had expected Infosys to report revenue of $4.86 billion and net profit of $814 million for the September quarter.

Infosys reported the fastest growth among its peers including HCL Technologies Ltd, Tata Consultancy Services Ltd, and Wipro, which reported sequential revenue growth of 2.4%, 2.2%, and 1% respectively.

At least one analyst was optimistic of broader demand recovery for India’s IT services sector on the back of Infosys’s performance.

“In general, we are seeing a recovery across industries in 2025. The US Fed cutting interest rates last month and the likelihood of more rate cuts in November and December can boost discretionary spends for clients too,” said Ashutosh Sharma, vice-president, research director, for Forrester Research.

At Wipro, some cheer, some disappointment

The mood was not much different 20 km northeast of Infosys at Wipro’s headquarters.

As at Infosys, much of Wipro’s business was pushed by clients in Europe, who contributed 63%, or $17 million, of the company’s sequential incremental revenue of $27 million.

Srinivas Pallia, who took over as Wipro’s chief executive officer just a little over six months ago, attributed the company’s growth to green shoots from clients operating in the banking and financial services sector.

“From our vantage point, discretionary spends remain constant since the previous quarter—nothing much has changed. But for us, we’re seeing momentum across industries in the Americas. This gives us signs of a good pipeline,” Pallia said during the company’s post-earnings briefing on Thursday.

“This marked the third consecutive quarter of growth in BFSI (banking, financial services, and insurance). A recent large deal also boosted our technology and communications business.”

Also read | Six months into CEO’s shoes, Pallia quietly scripting Wipro’s turnaround

Wipro reported revenue of $2.66 billion for the second quarter, up 1.02% sequentially, on a profit of $385 million, up 5.77% from the preceding three months—its best sequential jump since September 2021. Year-on-year, profit growth was 19.9%.

Analysts polled by Bloomberg had expected revenue of $2.65 billion and net profit of $358.5 million.

Wipro further cheered investors with a 1:1 bonus share.

While Wipro’s report card might have shown more sunlight than cloud, at least one analyst was not very optimistic about the company’s performance.

“Wipro continues to be a laggard in comparison with its other large-cap peers. It has failed to capitalise on its strength sectors such as oil and gas, and manufacturing,” said Omkar Tanksale, senior research analyst for IT at Axis Securities.

“This is a reflection on its lack of capability in convincing clients to convert deals even during a weak phase. Every company has spoken about better deals in BFSI this quarter. Wipro should have done better in its strength areas. This is a failure in customer engagement, and their guidance shows it too,” he added.

Wipro has outlined a revenue contraction of 2% to nil growth for the December quarter.

Also, while Infosys has added $273 million for the first half of the fiscal year, Wipro has reported a decline of $190 million.

But there was another bright spot in Wipro’s report card: its operating margin expanded 30 basis points sequentially to 16.7%—again, its best margin performance since September 2021.

For Infosys, operating margins remained unchanged at 21.1%.

Optimistic headcount

In the July-September quarter. Infosys’s headcount addition was more than double that of Wipro’s—while Infosys more than doubled its employee intake during the quarter, adding 2,456 employees, Wipro added 978.

Infosys and Wipro ended the July-September period with 317,788 and 233,889 employees, respectively.

HCL Technologies Ltd was the only one among Indian IT’s top companies to cut headcount during the fiscal second quarter.

Employee headcount—an indicator of the demand environment—at three out of four of the country’s largest IT services companies signals that growth is on the cards for the sector.

A pull-back in tech budgets and a high interest rate atmosphere in the US ensured that demand from software services companies remained low, dragging India’s $254 billion software services industry to its slowest full-year growth in 2023-24.

Also read | Indian IT sector’s much-awaited moment has arrived: the US Fed rate cut

A dim macroeconomic climate with tensions on the boil in West Asia is not providing much solace to investors, who were once buoyant of a growth recovery after the US Federal Reserve cut interest rates after four years last month.

Clients from banks and clients operating in the financial services sector, which give both Infosys and Wipro about a third of their revenue, drove the business even in this quarter.

While Infosys reported a 2.7% sequential growth in business from the financial services segment, Wipro reported a 3.7% jump from clients in the banking, financial services, and insurance sector.

Also read | Infosys resorted to this tried-and-tested hack to stem its top-level exodus: Promotions