Accenture, a global IT services giant, has reported a 7% year-on-year growth in its quarterly revenue, reaching $17.60 billion. However, this news has cast a shadow over the Indian IT sector, with major players experiencing a decline in their stock prices.

Accenture's Financial Highlights

Despite the overall growth, Accenture's shares closed down 2.73% at $232.56 following the results announcement. The company also revealed plans for an $865 million restructuring program over the next six months, aimed at realigning its workforce and operations to meet the growing demand for digital and AI services.

Impact on Indian IT Sector

The ripple effect of Accenture's results was felt across the Indian IT landscape:

• Infosys: ADR fell 2.9%
• Wipro: ADR dropped 1.84%

Motilal Oswal, a leading financial services firm, has expressed concerns about the performance of Indian IT companies in the near future. The firm cites several challenges:

1. Demand uncertainties
2. Deflationary pressure from AI productivity gains
3. Potential H1B visa constraints

However, Motilal Oswal also notes that current valuations for Indian IT companies are trading at reasonable levels, suggesting potential opportunities for investors.

Infosys Update

In a separate development, Infosys Limited has announced the completion of a merger between two of its wholly-owned step-down subsidiaries. As per the company's LODR filing:

• Infosys Germany GmbH and Blitz 24-893 SE have merged
• The resulting entity is named Infosys Germany SE

This strategic move by Infosys could be seen as part of the company's efforts to streamline its operations and strengthen its presence in the European market.

Outlook for the IT Sector

The IT services industry is undergoing significant changes, driven by the rapid adoption of AI and digital technologies. While Accenture's results show growth, particularly in AI-related bookings, the restructuring plan indicates a shift in the skills and resources required to meet evolving client demands.

For Indian IT companies, the coming months may prove challenging as they navigate changing market dynamics, potential visa issues, and the need to upskill their workforce to compete in the AI-driven landscape. However, the reasonable valuations noted by analysts suggest that the sector may still offer value for discerning investors.

As the industry continues to evolve, companies that can successfully adapt to the changing demand for digital and AI services are likely to emerge stronger in the long run.

Indian IT stocks continued their downward trend for the fourth consecutive day, reacting to the Trump administration's announcement of a $100,000 one-time fee on H-1B visas. The sector faced significant pressure, with major companies experiencing notable declines in their stock prices.

Market Performance

The BSE IT index dropped 1.10% to 34,149.55, reflecting the overall negative sentiment in the sector. Key players in the Indian IT landscape saw substantial losses:

The broader market also felt the impact, with the BSE Sensex falling 555.95 points to 81,159.68 and the NSE Nifty dropping 166.05 points to 24,890.85.

Cumulative Impact

The effect of this policy change has been severe on the valuations of major IT firms:

• Since last Friday, five major IT companies have collectively lost Rs 1,36,387.50 crore in market capitalization.
• TCS, the industry leader, saw an erosion of Rs 75,798.93 crore in its market value.
• Infosys faced a decline of Rs 23,119.19 crore in its market capitalization.

The Nifty IT index has plummeted more than 6% this week, underscoring the sector-wide impact of the visa fee hike.

H-1B Visa Concerns

The new $100,000 one-time fee on H-1B visas is particularly concerning for Indian IT companies, as Indian tech professionals account for over 70% of H-1B visa holders. This additional cost could significantly impact the operational expenses and hiring strategies of these firms in their U.S. operations.

Infosys Corporate Update

Amidst the market turmoil, Infosys announced the completion of a merger between two of its wholly-owned step-down subsidiaries. As per the company's LODR filing:

• Infosys Germany GmbH and Blitz 24-893 SE have merged.
• The merger was completed on September 24.
• The resulting entity is now known as Infosys Germany SE.

This corporate restructuring in Europe comes at a time when the company, along with its peers, is facing challenges in the U.S. market due to the visa policy changes.

Outlook

The IT sector's performance in the coming days will likely be closely watched by investors and analysts. The industry may need to reassess its strategies for global operations, particularly in the United States, in light of the new H-1B visa fees. Meanwhile, corporate actions like Infosys's European subsidiary merger indicate that companies are continuing to optimize their global structures amidst these challenges.