Zensar hit as Cisco pares vendors, fifth Indian IT firm under top-client pressure

This development makes Zensar the fifth Indian information technology (IT) services company to face pressure on a top account in the past year; This underscores a broader trend for global customers to rationalize vendors and cut costs; These moves put pressure on growth prospects for mid-tier IT outsourcing providers.

Similar companies such as Hexaware Technologies Ltd, Mphasis Ltd, LTIMindtree Ltd and Sonata Software Ltd all lost business from their largest customers last year.

Zensar is expected to get less work from managing Cisco’s back-end IT business, according to two people with knowledge of the matter. Mint It was unable to independently determine the amount of business lost from the customer and whether it would continue to lose share. Emails sent to Zensar on Sunday and to Cisco on Monday remained unanswered by press time.

The Pune-based IT outsourcing provider, part of RPG Group, receives around $40 million annually from Cisco. That accounts for roughly 6% of its total business, according to one of the two people who said the company’s revenue from Cisco has decreased. Low revenue from one of its largest customers could slow Zensar’s journey toward its $1 billion revenue goal.

Zensar reported revenue of $160.5 million in the October-December quarter (3FY26), down 1.4% sequentially. Much of the weakness came from telecom, media and technology (TMT) companies, which account for about a fifth of the company’s total business. The company closed last fiscal year with $624.5 million in revenue, up 5.4% annually.

At least one brokerage firm attributed the decline in the TMT sector to the company’s largest customer.

“Excluding TMT (which was down 8.7% quarter-on-quarter on a CC (constant currency) basis in Q3, primarily due to higher permissions at the top-tier customer), quarterly growth in the rest of the business was also soft at 0.3% quarter-on-quarter in Q3,” Equirus Securities analysts Sandeep Shah and Deep Modi wrote in a Jan. 24 note. he said.

This weakness is attributed to Cisco reducing the number of IT providers it works with.

“This appears to form part of a broader Cisco-led supplier rationalization and spending discipline effort,” said Phil Fersht, CEO of HFS Research. “Cisco is tightening discretionary spending, reducing lower-value staff augmentation efforts, and prioritizing fewer suppliers who can deliver higher-value, results-oriented programs, particularly around AI, cloud, and platform modernization.”

San Jose-based Cisco closed last fiscal year with $56.7 billion in revenue, up 5% year over year. The company manufactures network routers, switches and develops software for cybersecurity and video calls.

Industry echoes

Zensar’s situation mirrors the challenges faced by other Indian IT services companies, especially mid-sized IT outsourcing companies with total revenues of $1 billion to $5 billion.

Sonata Software, the latest entrant to Indian IT’s billion-dollar club, is expected to get less business from Microsoft, one of its five largest customers. Mint In July last year, it reported that Microsoft’s decision to sell software licenses directly to its customers rather than using a third party would hurt Sonata, which generates about 42% of its revenue from the sale of Microsoft software licenses.

Microsoft has also downsized its business, with the sixth-largest LTIMindtree, as the rise in automation has led the company to outsource less IT management work to Indian vendors.

In June 2025, Mint The US-based mortgage company had reported that cost-cutting efforts by the Federal National Mortgage Association (Fannie Mae) would cut 1% of the $1.43 billion annual revenue of the tenth largest Hexaware Technologies.

Around the same time, eighth-largest Mphasis Ltd lost its FedEx account, which accounted for 8% of its $1.61 billion in revenue and was its third-largest customer. The logistics company had chosen Accenture Plc to do most of its IT work.

But the pressure is slowly spreading to larger players. The second largest, Infosys Ltd, is expected to lose about $150 million in annual revenue from German auto giant Daimler starting next year.

Zensar’s appearance

Pressure at a senior account for Zensar and challenges in the TMT sector have rattled management, which is now aiming for growth beyond the segment.

“There’s no point in saying TMT, TMT, TMT. So, let’s get beyond that now. And now the ratio of TMT to the overall mix has been from the past. So that’s what we want to look forward to and look forward to. Fundamentally not — and try and try and try to still deliver growth no matter what happens in TMT,” Zensar Technologies CEO Manish Tandon said during the company’s post-earnings analyst. call on January 23 in response to a question about account difficulties.

Management attributed the decline in revenue to customers shifting their spending from traditional IT services to automation-related hardware.

“As for TMT, my comment has been consistent. We are seeing a shift in capital investment from services to AI (artificial intelligence), especially in purchasing hardware etc. So I don’t think TMT will improve significantly,” said Tandon, who took over as CEO in December 2022.

Technology, telecom and media companies accounted for just over a third of Zensar’s revenue almost four years ago. Today they account for less than a fifth.

Brokers remain wary of the company as growth emerges as an urgent concern. Zensar has finished with full-year revenue declines in two of the last five years.

“When the current CEO came on board, he aspired to see ZENT (Zensar Technologies) increase by one quarter annually in terms of revenue growth to the leaders’ quarter in FY4 (FY27). Since FY24 was the first year, it was in the bottom quartile for revenue growth but focused on improving margins to peer-matching levels. This happened quite quickly in FY24,” said Girish Pai and Lopa Notaria, analysts at Bank of Baroda Capital Markets. In a note dated January 24.

Analysts said the company needs to improve its capabilities to increase its chances of growing better than its rivals.

“Getting into the leaders’ quadrant by FY27 will require improving both sales and distribution strength and developing significant capabilities in efficiency-based projects. ZENT is yet to generate confidence in us to achieve the leaders’ quadrant in growth by FY27 (which will be largely dominated by better-performing tier II companies),” Bank of Baroda Capital Markets said in a note.

Low revenue from its top accounts could further complicate Tandon’s effort to steer Zensar towards its $1 billion revenue target and the industry’s top growth quartile by FY27.