The US reciprocal tariffs war is beginning to hit the Indian IT industry, with contracts getting delayed as customers adopt a wait-and-watch approach. Some of the country’s top tech services exporters — including Tata Consultancy Services (TCS), Infosys, and Wipro — have begun to show signs of strain, as revealed in their recent quarterly earnings calls. Tata Consultancy Services (TCS), Asia’s largest IT services provider, has flagged growing uncertainty, which it said started in February but has now begun to impact project timelines and client decision-making. K. Krithivasan, CEO and MD at TCS, while announcing the quarterly results, stated that while the overall business environment was positive till February, the company started witnessing some amount of uncertainty since March. This has resulted in some project delays and some ramp-downs. “The Consumer Business Group saw heightened caution and delays in discretionary projects, especially in the US. This was driven by the significant drop in consumer sentiment in February, which preceded changes in global trade and tariffs, creating a domino effect on retail CPG (Consumer Packaged Goods) and TTH (Travel, Transport, and Hospitality) industries,” he said. Wipro is facing a similar heat from the US tariff announcement. While the company started the January 2025 quarter on a positive note, gradually during the quarter, the sentiments turned negative, and the company started witnessing the impact in the US as well as the European market. This is because of the tariff hike and the anticipation around that, which had a cascading impact, Srinivas Pallia, CEO & MD of Wipro, said during the company’s recent analyst call. He also acknowledged that some of the clients in Europe have also slowed down transformation projects, and want to relook at the timelines at this point in time. Infosys, on the other hand, said that its clients have started experiencing tariff pressures, but that hasn’t led to any impact on any existing client discussions. Neil Shah, Vice President Research at Counterpoint Research, said the mounting pressure for onshoring from the US government, beginning with tariffs on goods, will tend to impact IT outsourcing and offshoring – sectors where US firms have long relied on global partners like TCS due to talent gaps, global reach, and cost competitiveness. Experts also said that many companies want to wait out the 90-day tariff hold and reassess their IT spending once the US trade posture becomes clearer. “The biggest challenge for IT budgets is uncertainty.  That being said, projects that are focused on cost reduction, exponential efficiency, and regulatory compliance are still being funded,” said Ray Wang, principal analyst and founder at Constellation Research. The 90-day pause: No relief yet The 90-day pause of tariffs by the White House was meant to give companies some breathing room. However, the reality on the ground is starkly different as it has deepened hesitation among enterprise clients, triggering deal delays, project suspensions, and a slowdown in digital transformation spending. “We were doing a large SAP program, which was very critical for the client, and this was in the consumer sector. And when the client heard about the tariff situation, they were bang in the middle of that, and they put the whole program on pause. Not because they don’t want to do the program, but they wanted to understand, get the certainties of the tariff situation,” said Pallia of Wipro. Even Krithivasan of TCS added that there would be delays in decision-making on discretionary spend if this uncertainty continues. “There are two types of IT services contracts – ‘run the business’ and ‘grow the business.’ ‘Run the business’ will continue while ‘grow the business,’ which is dependent on discretionary spending, will be impacted. Clients might prefer shorter deals for ‘grow the business.’ For ‘run the business,’ clients will expect cost optimization with GenAI, so the contract value of these deals may come down,” said Pareekh Jain,  CEO at EIIRTrend & Pareekh Consulting. Jain said that contrary to the belief that there will be an increase in discretionary spending and more contracts in growth the business with GenAI, but that looks doubtful because of tariff uncertainty. What happens after the tariff pause ends? The biggest question remains: what happens once the 90-day tariff hold ends? If tariffs are reinstated — or even expanded — could it potentially lead to contract renegotiations or client attrition? There can be significant near-term structural shifts in how US firms engage with IT companies, driven by government pressure for onshoring and increasing market volatility. In the long term, the potential for AI to reduce reliance on outsourced IT services can add another layer of transformation, said Shah. Wang of Constellation Research said up to two-thirds of the pending contracts would be in this limbo due to tariff uncertainties. Shah of Counterpoint Research said there is a potential 10-20% impact on future growth opportunities due to the current tariff wars and potential rising inflation in the US, necessitating TCS and other firms to be astute with more flexible engagement models to protect the pipeline until the tariff situation stabilizes. The IT companies are learning to navigate a world where trade policy, not technology, has emerged as the biggest disruptor. Amidst all the uncertainty, TCS is hopeful that FY26 will be better than FY25. Infosys is looking to expand in other geographies, such as Japan, in addition to the work the company has been doing in the US.