Indian IT Major See Revenue Contribution Dip from Healthcare Sector Amid Regulatory Uncertainty

Indian IT service firms are experiencing a trimmed revenue share from the healthcare and life sciences sector, driven by regulatory uncertainty and inflation pressures globally. Four out of the five major Tier-1 IT service firms have recorded a year-on-year decrease in revenue contribution from this vertical, with dips ranging between 20 and 160 basis points.

Cognizant, which maintains the largest exposure to the sector among its peers, posted the sharpest decline. Its healthcare revenue dropped by 160 basis points, moving from 29.6 per cent to 28 per cent. Wipro and HCL also registered notable declines, falling by 100 and 90 basis points to 13.5 per cent and 13.8 per cent, respectively. TCS saw a more subdued change, with a 20 basis point dip bringing its share to 10.3 per cent.

Bucking the broader trend, Infosys saw its revenue mix from the healthcare segment increase by 200 basis points, rising from 6.4 per cent to 8.4 per cent. The Bengaluru-based IT major has traditionally derived a lower share of its revenue from healthcare compared to its peers.

Industry executives and analysts attribute these shifts to an unstable regulatory environment, particularly in the US market, alongside medical inflation that has led to cautious technology spending from major healthcare firms. During a recent press briefing, Cognizant CEO Ravi Kumar noted that regulatory and funding changes continue to constrain discretionary spending in the vertical, pointing specifically to uncertainties surrounding Medicare and Medicaid.

Kumar highlighted that the funding of these programs, which rely on state and federal governments, remains in flux. This follows the Trump administration’s One Big Beautiful Bill Act, which healthcare policy research organization KFF estimates will reduce Medicaid spending by approximately $911 billion over ten years while introducing tighter eligibility and work requirements. Consequently, state governments, insurance companies, and healthcare providers have deferred technology projects. However, Kumar added that his company is seeing early signs of stabilisation and expects further certainty by the quarter ending December 2026.

Gaurav Vasu, Founder and CEO of UnearthInsight, pointed to a larger structural shift where technology spending in the sector is moving toward cloud and artificial intelligence rather than traditional transformation and implementation projects. While 'run-the-business' activities like ERP and CRM will persist, he noted that new initiatives are unlikely to translate into traditional services-related work. He added that healthcare's share of IT services revenue is unlikely to decline further, though it will likely remain stagnant as investments pivot toward AI outside traditional IT budgets.

Meanwhile, the pharmaceutical vertical appears more resilient. Duraisamy Rajan Palani, Founder and CEO of life sciences-focused IT service company Archimedis Digital, stated that the pharma sector has been a primary adopter of AI, leading to increased tech spend. However, he noted that the nature of work has shifted from administrative and legacy technology to advanced domains like drug discovery and product development, requiring IT service providers to adapt their skill sets to meet changing client project demands.

"The recent dip in healthcare revenue share among major Indian IT firms highlights how closely global technology spending is tied to regulatory and policy shifts in key markets like the US. As enterprise budgets pivot towards advanced technologies like cloud and AI rather than traditional implementation projects, IT service providers must adapt their capabilities to align with these changing client demands. While traditional administrative spending faces near-term headwinds, companies that successfully upgrade their technical skill sets for modern domains will remain relevant in a shifting landscape." — Dr. Shishir Gupta, Founder & CEO, StartupLanes