Zensar Technologies Faces Revenue Pressure as Cisco Reduces Vendor Count
Zensar Technologies Ltd is experiencing reduced business from Cisco Systems, one of its top five clients, as the US technology giant pares down its IT vendor list and tightens discretionary spending. This development marks Zensar as the fifth Indian IT services company in the past year to face pressure from a major account, highlighting a broader trend of global clients rationalizing vendors and cutting costs.
Impact on Zensar's Revenue and Growth Goals
The Pune-based IT outsourcer, part of the RPG Group, receives approximately $40 million annually from Cisco, constituting roughly 6% of its total business. According to sources, revenue from Cisco has been declining, which could slow Zensar's journey toward its aspirational $1 billion revenue target. Zensar reported revenue of $160.5 million in the October-December quarter (Q3FY26), down 1.4% sequentially, with weakness primarily from telecom, media, and technology (TMT) companies that make up about a fifth of its business.
Broader Trend in the Indian IT Industry
This situation mirrors challenges faced by other mid-sized Indian IT services companies. Peers including Hexaware Technologies Ltd, Mphasis Ltd, LTIMindtree Ltd, and Sonata Software Ltd have all lost business from their largest clients over the last year. For instance, Sonata Software is expected to get less business from Microsoft, while LTIMindtree has seen trimmed business from Microsoft due to increased automation.
Phil Fersht, chief executive of HFS Research, noted that Cisco is tightening discretionary spend, reducing lower-value staff augmentation work, and prioritizing fewer vendors that can deliver higher-value, outcome-oriented programs, particularly around AI, cloud, and platform modernization.
Management Response and Strategic Shifts
Zensar's management, rattled by pressure in top accounts and challenges in the TMT vertical, is now focusing on growth beyond this segment. Manish Tandon, chief executive of Zensar Technologies, stated during a post-earnings analyst call that the company is seeing a lot of spend moving away from services to AI and capital investment in hardware. He emphasized moving beyond TMT dependence, noting that technology, telecom, and media companies now account for less than a fifth of revenue, down from over a third four years ago.
Analyst Perspectives and Future Outlook
Brokerages remain cautious on Zensar as growth emerges as an immediate concern. Analysts from Equirus Securities attributed the decline in the TMT vertical to higher furloughs, especially in the top client. Bank of Baroda Capital Markets analysts highlighted that Zensar needs to build sales and delivery capabilities to achieve its goal of entering the leader's growth quadrant by FY27. Lower revenue from top accounts could complicate efforts to reach the $1 billion revenue target and improve growth positioning.
This trend is not limited to mid-tier firms; pressure is slowly spreading to larger players like Infosys Ltd, which is expected to lose about $150 million in annual revenue from German auto major Daimler starting next year. The ongoing vendor rationalization and cost-cutting by global clients continue to weigh on the growth prospects of Indian IT outsourcers, prompting strategic realignments and capability enhancements across the industry.
