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Infosys Approves Record $2 Billion Share Buyback

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Infosys, India’s second-largest IT services provider, said Thursday it has approved a share buyback of 180 billion rupees ($2.04 billion), the biggest in its history. The company set a buyback price of 1,800 rupees per share, with the repurchase to be carried out through the tender offer route.

This marks Infosys’ fifth buyback, following its last repurchase in 2022–2023.

Market analyst Gaurav Vasu, founder of UnearthInsight, noted that Indian IT firms remain investor-friendly and service-driven, but suggested they should also explore mergers & acquisitions and focus on developing AI and cloud products, similar to U.S. tech giants.

Following the announcement, Infosys’ U.S.-listed shares edged up 0.03% to $16.99, while its Mumbai-listed shares closed 1.5% lower at 1,509.7 rupees.

India’s IT Sector Faces Uncertainty as U.S. Considers Outsourcing Tax

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India’s $283 billion IT industry is bracing for turbulence after U.S. lawmakers introduced a proposal to impose a 25% tax on outsourcing, a move that could reshape decades of cross-border technology contracts. Analysts and lawyers warn the bill could delay deals, trigger renegotiations, and heighten regulatory risks for a sector that makes up over 7% of India’s GDP.

The Proposal

Republican Senator Bernie Moreno introduced the HIRE Act, which would:

  • Impose a 25% tax on U.S. companies that outsource IT services abroad.

  • Bar companies from claiming outsourcing payments as tax-deductible expenses.

  • Funnel revenue into U.S. workforce development.

In some scenarios, combined federal, state, and local taxes could raise outsourcing costs to as much as 60%, according to EY India’s Jignesh Thakkar.

Why It Matters

India’s IT giants — including TCS, Infosys, HCLTech, Tech Mahindra, Wipro, and LTIMindtree — count Apple, Citigroup, FedEx, Cisco, and Home Depot among their major U.S. clients. Outsourcing has long been criticized in the U.S. for shifting jobs overseas, but it remains vital to companies facing domestic labor shortages.

The bill comes at a difficult time for Indian IT firms already struggling with weak revenue growth as inflation, tariffs, and deferred tech spending weigh on their U.S. business.

Industry Reaction

Analysts expect a wave of lobbying and legal challenges if the bill advances. “A bill like this would probably face a lot of backlash from U.S. companies that rely heavily on outsourcing,” said Sophie Alcorn, CEO of Alcorn Immigration Law.

Others anticipate dilution: “More likely is a narrowed or delayed version of the bill,” said Phil Fersht of HFS Research.

Still, the uncertainty is already affecting contracts. “When political noise turns into regulatory risk, clients quickly insert contingencies, reopen pricing and demand delivery flexibility,” said Saurabh Gupta of HFS Research, warning that signing and renewal cycles will slow.

Global Capability Centers at Risk

The proposed tax could also impact U.S. firms’ global capability centers (GCCs) in India, which have evolved from low-cost back offices into innovation hubs for R&D, finance, and operations. “It will be hard to pull back from existing work, but new set-ups and expansion may get impacted,” said Yugal Joshi of Everest Group.

Outlook

Experts note the U.S. still lacks sufficient skilled tech labor, meaning outsourcing remains a structural necessity. As Bharath Reddy of CAM put it: “The lack of availability of appropriate human capital in the U.S. will continue as a problem — one that can be addressed in the near future only through outsourcing.”

TCS misses revenue estimates amid tariff-driven client caution

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Tata Consultancy Services (TCS), India’s largest software-services exporter, reported quarterly revenue below analyst expectations on Thursday, as client spending slowed due to ongoing uncertainty around U.S. tariffs. The revenue miss has sparked concerns over demand for India’s $283 billion IT sector and negatively impacted shares of U.S.-listed Indian tech rivals Infosys and Wipro.

TCS CEO K Krithivasan noted on a conference call that delays in decision-making and project launches related to discretionary spending have persisted and intensified during the quarter. He said it is “too early” to predict when growth will return but suggested that clarity might emerge by late July or early August, depending on the U.S. spending bill’s progress.

TCS reported consolidated sales of 634.37 billion rupees ($7.40 billion) in Q1, rising 1.3% year-on-year but falling short of the 646.66 billion rupees analysts had forecasted. Four of TCS’s six verticals saw revenue declines compared to the previous year, with only banking and financial services (up 1%) and technology services (up 1.8%) showing growth.

Total order bookings dropped to $9.4 billion in the quarter, down from $12.2 billion in the previous quarter but higher than $8.3 billion a year ago.

Research analyst Sagar Shetty from StoxBox highlighted that the weak top-line numbers reflect ongoing client caution, a trend likely to affect other tier-1 IT firms and potentially lead to downward revisions in revenue guidance. HCLTech, Infosys, and Wipro are set to report results later in July. Following TCS’s announcement, Infosys shares fell 3.3% and Wipro shares dropped 4.2%.

Despite the revenue shortfall, TCS’s net profit rose 6% to 127.60 billion rupees, beating analyst expectations largely due to a delayed wage hike and higher other income.