How to Analyse IT Services Results: Growth, Margins, Deals and Headcount

An IT services result is best analysed as a conversion system: demand becomes bookings, bookings become revenue, and revenue becomes profit only after people, utilisation, pricing and currency effects. Reading revenue growth or total contract value on its own misses most of that system.

The largest Indian IT companies publish many apparently comparable numbers, but definitions can differ. Fix the reporting basis before placing TCS, Infosys and HCLTech in the same table.

Begin with the cleanest growth measure

Reported rupee revenue combines business growth and currency translation. Dollar revenue removes the rupee leg but still moves with currencies in which customers pay. Constant-currency growth attempts to hold exchange rates fixed.

Use three views:

• year-on-year constant-currency growth for direction;
• sequential constant-currency growth for the latest momentum; and
• reported revenue for the financial statements and cash-flow bridge.

Then split growth by service line, industry vertical and geography. A company growing through cloud and engineering services has a different demand signal from one growing through a large low-margin infrastructure contract.

The Altys financial snapshot for the trailing 12 months ended June 2026 recorded consolidated revenue of roughly ₹2,75,859 crore for TCS, ₹1,84,582 crore for Infosys and ₹1,34,374 crore for HCLTech. Their reported year-on-year TTM revenue growth was approximately 7.7, 11.2 and 12.6 per cent respectively. This is a starting point, not a league table. Currency, acquisitions and portfolio mix still need to be separated.

Treat deal wins as an inventory of possibilities

Large-deal or TCV announcements are often interpreted as tomorrow’s revenue. That is too simple.

For each bookings number, ask:

1. Is it total contract value or annual contract value?
2. Does it include renewals?
3. What is the average duration?
4. How much is committed versus optional?
5. When does the work ramp?
6. Is the deal replacing an existing contract?

A five-year renewal does not enter next quarter’s revenue in one step. A large transformation programme can begin with transition costs before contributing to margin. That is why the better analytical series is bookings alongside subsequent revenue conversion, not bookings alone.

Build a margin bridge

IT services has few physical raw materials, but margins still have many moving pieces. A useful bridge starts with the previous quarter’s operating margin and adds or subtracts:

• pricing;
• utilisation;
• employee pyramid;
• wage revisions;
• subcontractor usage;
• travel and discretionary costs;
• currency movement;
• acquisitions; and
• restructuring or exceptional items.

Altys data for the trailing year ended June 2026 showed EBITDA margins of about 25.0 per cent for TCS, 23.0 per cent for Infosys and 19.8 per cent for HCLTech. The corresponding year-on-year EBITDA growth rates were about 1.9, 6.8 and 3.3 per cent. TCS’s revenue grew faster than its EBITDA in this snapshot, while Infosys showed a smaller gap. That tells the analyst where to investigate. It does not, by itself, explain the cause.

Headcount is an operating signal, not a score

Revenue is delivered mainly through people, so headcount, utilisation and attrition help explain current capacity and management’s confidence.

Falling headcount can indicate weak demand, automation, tighter hiring or improved utilisation. Rising headcount can signal demand preparation, an acquisition or an inefficient bench. The interpretation depends on the combination:

• revenue growth versus headcount growth;
• utilisation excluding trainees;
• subcontractor expense;
• fresher hiring and pyramid mix;
• attrition; and
• management’s commentary on capacity.

Revenue per employee can be useful over longer periods, but acquisitions, onsite mix and currency can distort it.

Guidance is a range of operating assumptions

When a company guides revenue growth or operating margin, translate the band into model assumptions rather than copying its midpoint. Record the stated currency basis, exclusions and the date on which guidance was issued.

Then reconcile guidance with:

• the achieved year-to-date growth rate;
• the sequential growth required in remaining quarters;
• announced deal ramps;
• furlough and seasonality patterns;
• the margin implied by wage and utilisation assumptions; and
• management’s historical guidance accuracy.

This turns the concall into testable model inputs. It also makes a later revision visible as a change in information, rather than as a rewritten memory.

Cash conversion closes the loop

IT companies can report high accounting returns, but analysts should still examine operating cash flow, receivable days, unbilled revenue, tax payments, capital expenditure and shareholder distributions.

If profit grows while operating cash flow weakens, determine whether the cause is billing timing, collections, taxes, a contract transition or a persistent deterioration. A quarter-end working-capital movement should not automatically be annualised, but it should not be ignored.

The quarterly checklist

1. Constant-currency growth, sequential and year on year.
2. Growth by vertical, service and geography.
3. Deal wins, renewals, duration and conversion.
4. Operating-margin bridge.
5. Headcount, utilisation, attrition and subcontracting.
6. Guidance versus achieved run rate.
7. Receivables and cash conversion.
8. Capital allocation and payout.
9. Changes in demand commentary.
10. Evidence that confirms or challenges the thesis.

Altys can keep the reported financials, guidance statements, concalls and model assumptions connected across quarters. That matters because the analytical edge is rarely one summary. It is noticing when bookings, revenue, people and margin stop telling the same story.

Data note: Altys consolidated financial snapshot for the trailing 12 months ended 30 June 2026, available by 13 September 2026. Figures are rounded and sourced from reported financial statements in the Altys data layer. Company-specific operational definitions must be checked in the relevant result materials.