Revenue from healthcare sector declines for Indian IT companies

Amid regulatory uncertainty and inflationary pressures in the global healthcare industry, the share of revenue from the healthcare and life sciences verticals of Indian IT services companies is witnessing a decline. Out of the top five Tier-1 IT services companies, four have reported a decrease of 20 to 160 basis points in their annual revenue contribution from the healthcare sector.

According to a report by BusinessLine, Cognizant has recorded the largest decline in this sector. Compared to other companies, this firm, which has the highest exposure to the healthcare sector, saw its healthcare revenue decline by 160 basis points, dropping from 29.6 per cent to 28 per cent. Significant declines were also observed in Wipro and HCL, with Wipro's share decreasing by 100 basis points and HCL's by 90 basis points, standing at 13.5 per cent and 13.8 per cent respectively. The decline was lower in TCS, where the share stood at 10.3 per cent following a 20 basis point drop.

However, Infosys has emerged as an exception to this trend. The Bengaluru-based IT company saw a 200 basis point increase in its revenue mix from the healthcare segment, rising from 6.4 per cent to 8.4 per cent. Compared to other companies, Infosys's revenue share from the healthcare sector has traditionally been lower.

Industry officials and analysts believe that an unstable regulatory environment, particularly in the US market, and medical inflation have hindered technology spending by large healthcare companies. Cognizant CEO Ravi Kumar stated in a recent press briefing that changes in regulation and funding are limiting discretionary spending in this sector. Referring to America's two major government insurance programmes, Medicare and Medicaid, he noted that regulatory uncertainty is being observed in these programmes.

Kumar further stated, "Funding for Medicaid and Medicare programs by state and federal governments is still going through a phase of uncertainty." This issue has arisen following the Trump administration's 'One Big Beautiful Bill Act'. According to the healthcare policy research organisation KFF, this law is expected to reduce Medicaid spending by approximately $911 billion over the next ten years, alongside tightening eligibility and operational requirements. According to analysts, this uncertainty has led state governments, insurance companies, and healthcare providers to defer tech projects. However, Kumar added that the company is seeing early signs of stability and expects more clarity by the end of December 2026.

Gaurav Vasu, founder and CEO of Anorthinsight, pointed towards a major structural shift in this sector. He stated that technology spending in this sector is now shifting towards Cloud and AI, instead of traditional transformation and implementation projects. In his view, 'run-the-business' activities such as ERP and CRM will continue, but there is less likelihood of new initiatives and exploratory investments transforming into service-related work.

Cognizant is a global IT services company that provides technology-based solutions to various industries.