Accenture’s DOGE Warning: Why Indian IT Firms Are in a Safer Spot

Accenture has warned that U.S. federal spending cuts under the DOGE program are impacting its revenue. However, Indian IT firms like TCS and Infosys are less affected, as they earn less than 2% of their revenue from U.S. government contracts, compared to Accenture’s 16% in the Americas in 2024. Analysts suggest that Indian IT firms rely more on private-sector clients, making them less vulnerable to budget reductions, unlike consulting firms such as McKinsey, BCG, and the Big Four, which have greater public sector exposure.

Additionally, Indian IT contracts with U.S. state governments tend to be smaller and more cost-sensitive, minimizing their risk. Infosys Public Services won a contract in 2024 to modernize Delaware’s labor systems, while TCS secured a deal in 2023 to upgrade Georgia’s Department of Labor IT systems—both likely valued at under $50 million. These deals may not be significantly impacted by DOGE spending cuts. Meanwhile, Cognizant could face greater challenges due to its acquisition of Belcan, a firm that generates 40% of its $800 million revenue from federal contracts.

While the IT services sector faces overall uncertainty, Indian IT firms are in a relatively stable position due to their diversified revenue streams and lower reliance on government contracts.

Accenture’s DOGE Warning: Why Indian IT Firms Are in a Safer Spot

Accenture, a global IT services leader, has recently expressed concerns about potential revenue losses due to anticipated cuts in U.S. federal spending under the DOGE program. These reductions could impact companies heavily reliant on government contracts. However, industry experts suggest that major Indian IT firms like Tata Consultancy Services (TCS) and Infosys may escape significant harm due to their limited dependence on U.S. federal projects.

Why Indian IT Firms Are Less Vulnerable

Analysts highlight a key distinction between Accenture and Indian IT giants: revenue sources. While Accenture derives around 16% of its revenue from U.S. federal contracts in the Americas (as of 2024), Indian companies generate less than 2% of their income from such deals. This contrast suggests that budget cuts under DOGE are unlikely to destabilize Indian firms, which focus more on private-sector clients in industries such as banking, retail, and healthcare.

Prashant Shukla of Everest Group notes that while Indian providers may experience indirect effects—such as slower decision-making or reduced tech budgets in related sectors—their direct exposure to federal contracts remains minimal. Gaurav Vasu from UnearthInsight adds that consulting firms like McKinsey, Boston Consulting Group (BCG), and the “Big Four” accounting firms face greater risks, as their work is more closely tied to government projects. In contrast, Indian IT companies have strategically diversified their client bases, insulating themselves from public-sector volatility.

Smaller, Cost-Effective Contracts Offer Protection

Another advantage for Indian firms lies in the nature of their U.S. state-level contracts. These agreements, often focused on modernizing systems or enhancing digital services, tend to be smaller in scale and prioritize cost efficiency. For example, Infosys Public Services secured a 2024 contract to upgrade the Delaware Department of Labor’s technology infrastructure, while TCS landed a similar deal in Georgia in 2023. Both projects are estimated at under $50 million—relatively modest compared to federal contracts. Such cost-sensitive engagements are less likely to be impacted by spending cuts, as they deliver tangible efficiency improvements without requiring massive budgets.

Cognizant: An Exception to the Rule

While most Indian IT firms remain well-insulated, Cognizant—a U.S.-based company with a significant workforce in India—faces greater exposure. Its recent acquisition of Belcan, an engineering services provider, adds complexity. Belcan generates nearly 40% of its $800 million annual revenue from U.S. federal contracts, making Cognizant more susceptible to DOGE-related cuts. This underscores how mergers and acquisitions can alter a company’s risk profile, even if it has strong ties to India’s IT sector.

Broader Sector Uncertainty

The DOGE spending cuts have undeniably created uncertainty across the global IT services industry. Companies reliant on government projects are preparing for potential delays, budget reductions, and project cancellations. Accenture’s warning reflects broader anxieties, particularly among firms with deep ties to federal initiatives. However, Indian IT’s emphasis on commercial clients and diversified revenue streams positions it as a relative safe haven.

Looking Ahead

The situation underscores the importance of strategic client diversification. Indian firms’ focus on private-sector innovation—from AI-driven solutions to cloud computing—has not only reduced their vulnerability to policy shifts but has also aligned them with global digital transformation trends. While no company is entirely immune to macroeconomic pressures, the ability to adapt and serve dynamic industries provides a competitive advantage.

In summary, while the DOGE program’s spending cuts may create ripples in the IT sector, Indian companies like TCS and Infosys are better positioned than their global counterparts. Their minimal reliance on federal contracts, combined with agile, cost-effective solutions for state governments and private enterprises, offers resilience in uncertain times. Nonetheless, the evolving landscape reminds all players of the need to manage risk, diversify portfolios, and remain attuned to geopolitical and economic shifts.