Despite challenges like stricter immigration policies and trade tensions during his first term, the sector is positioned to benefit from rising technology spending across key industries such as healthcare, banking, and high-tech, which will continue to drive revenue growth.
The shift to a more pro-business administration is a significant positive for technology investments.
During Trump’s first term, tighter H1B visa regulations impacted hiring strategies, but Indian IT companies quickly adapted by increasing on-shore and localized hiring, minimizing the impact.
With the new administration’s emphasis on business-friendly policies, technology spending is expected to rise, benefiting IT firms, especially those with significant exposure to the US market.
Trump’s Tax Cuts and Jobs Act (TCJA) in 2017, which lowered the federal corporate tax rate from 35% to 21%, provided a significant boost to corporate earnings, including IT companies.While the trade war and tariffs offset some of the benefits in other sectors, Indian IT services experienced steady growth.Though the direct correlation between tax cuts and revenue growth may be limited, the overall trend of increasing tech investment, particularly in sectors like healthcare and banking, continues to drive growth for Indian IT firms.
Technology spending is expected to rise in the coming years, with healthcare and banking leading the way. Healthcare’s digital transformation remains a strong demand driver for IT services, while a recovery in US bank spending is expected to further support IT spending.
Additionally, the resurgence of high-tech, particularly with investments in emerging technologies like GenAI, presents further growth opportunities for Indian IT companies focused on next-gen digital solutions.
While manufacturing may face short-term challenges, particularly in aerospace and automotive sectors, the broader technology spending environment remains favorable. The anticipated rate cuts provide additional tailwinds, fueling growth in the sector.
Indian IT services are well-positioned for sustained growth. Companies like HCL Technologies, LTIMindtree, Coforge, and Persistent Systems are expected to lead, with strong portfolios, resilient engineering services, and expertise in next-gen technologies.
The combination of a favorable macroeconomic environment, continued technological advancements, and key sectoral investments creates an exciting period for Indian IT companies.
Coforge: Buy| Target Rs 10,000| LTP Rs 8076| Upside 23%
COFORGE delivered strong growth across multiple verticals, including BFS, Insurance, and Travel, with robust order intake and an 18% YoY increase in its executable order book.
The company’s future growth drivers include a diversified business model, expanding geographical presence, and increasing activity in high-growth sectors like healthcare and product engineering.
We expect COFORGE to achieve organic revenue growth of 19.0%, EBIT growth of 20.6%, and PAT growth of 17.0% in 2HFY25, positioning it as a key beneficiary of the ongoing demand recovery.
HCL Technologies: Buy| LTP Rs 1865| Target Rs 2,300| Upside 23%
HCL Tech revised its FY25 growth guidance to 3.5%-5% YoY, supported by strong deal wins and its leading position in data/SAP modernization.
Its investments in next-gen platforms position it well for the GenAI revolution and future recovery in client spending, with expected margin improvements to 18.9% by FY26 and an 8.4% CAGR in USD revenue over FY25-27.
(The author is Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd)
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)