As global enterprises look to tighten spending and simplify operations, leading IT services firms Infosys Ltd and Cognizant Technology Solutions are seeing rising demand for vendor consolidation—where companies cut down the number of IT providers they work with.

Both firms have identified this shift as a core growth lever in the current economic cycle, marked by cautious tech spending and fewer new deal announcements.

At a recent analyst call with Kotak Institutional Equities, Infosys executives said the firm is actively pursuing multiple vendor consolidation opportunities, which have become a key focus area amid a weak net-new deal environment.

“The IT industry currently does not have a healthy flow of net new deals. Infosys has plenty of vendor consolidation deals in the pipeline,” analysts Kawaljeet Saluja, Sathishkumar S, and Vamshi Krishna noted in a 6 June 2025 report, citing inputs from Jayesh Sanghrajka, Chief Financial Officer at Infosys, and Sandeep Mahindroo, the company’s financial controller.

Cognizant echoed similar trends during the Bank of America Global Technology Conference, where Surya Gummadi, President of Cognizant Americas, said that although vendor consolidation is not always the primary objective, it has become a natural outcome of cost-optimisation efforts.

“To accomplish the cost optimisation, clients are trying to break the silos across multiple vendors and consolidate players to a few who can deliver maximum value and provide end-to-end solutions,” Gummadi told analyst Jason Kupferberg.

Cognizant and Infosys both indicated that while fresh tech investments remain slow, existing budgets are being reallocated to a smaller number of capable partners who can handle more responsibilities across the technology stack.

Both companies also confirmed that they have not witnessed any cutbacks in client spending or major project cancellations, offering some stability in an otherwise subdued market.

The consolidation trend is being observed across the broader Indian IT industry, with Tata Consultancy Services (TCS), LTIMindtree, and Persistent Systems also noting similar patterns. Enterprises are reportedly rationalising their vendor lists to reduce costs and improve delivery accountability.

“Companies do these vendor consolidation exercises to reduce expenses and incentivise their existing IT vendors to do the extra work at a lower cost,” said Pramod Gubbi, founder of Marcellus Investment Managers, in comments reported by The Economic Times.

With nearly 75% of its global workforce based in India, New Jersey-headquartered Cognizant remains closely tied to the Indian tech ecosystem and is expected to benefit from this realignment.

Despite slower net-new deal flows, Infosys and Cognizant posted modest revenue growth in their latest financial results, supported in part by deeper client engagements and large renewals.

• Cognizant reported $19.74 billion in revenue for calendar year 2024, up 1.98% from a 0.4% decline in 2023. The company attributed part of the growth to strategic acquisitions.
  
  

• Infosys, whose financial year runs April to March, posted a 3.85% increase in revenue to $19.28 billion for FY2024-25, compared to 1.9% growth in the previous fiscal.
  
  

While market leader TCS grew 3.78% to $30.18 billion, and HCLTech reported 4.3% growth to $13.84 billion, both Wipro and Tech Mahindra posted revenue declines of 2.72% and 0.21%, respectively.