Indian IT Services Companies' Dividend Payout Declines Amid AI Investments

Top IT services companies saw their combined dividend payout decline in FY26, dragged by sharp reductions from Tata Consultancy Services (TCS) and HCL Technologies , even as both companies stepped up investments in artificial intelligence through large acquisitions. Total dividend payouts across TCS, Infosys, HCLTech and Wipro stood at Rs 85,199.75 crore in FY26, down 0.98% from Rs 86,038.8 crore in FY25. This is the second time in five years and third time in a decade that annual dividend payout by the top four IT firms reduced over the previous fiscal. The decline was led by TCS, which saw its dividend payout fall 13.24% to Rs 39,571 crore in FY26, from Rs 45,612 crore a year earlier. HCLTech reported a 10% decline, with payouts at Rs 14,661 crore, compared with Rs 16,290 crore in FY25. Reductions come in a year when both companies announced sizeable acquisitions to strengthen artificial intelligence capabilities, indicating a shift in capital allocation towards growth investments. “The mixed payout trends highlight a shifting capital allocation approach within the sector, where rising investments in emerging technologies such as AI are beginning to compete more directly with shareholder returns, even as demand recovery remains uneven across key markets ,” an analyst with a leading brokerage said. The sector also saw ups and downs in investor confidence, as Anthropic introduced new capabilities to its generative AI platform, Claude. Fears of further disruptions in the IT services business models fuelled anxiety around the sector’s stocks in the last two months of FY26. TCS and HCLTech stepped up acquisition-led investments, with a clear focus on AI and data capabilities. TCS deployed about $773 million (approximately Rs 6,950 crore) across acquisitions, including Coastal Cloud and ListEngage. HCLTech invested around $415 million (about Rs 3,750 crore at the same exchange rate) in deals such as Jaspersoft, HPE’s telecom solutions business and Finergic, reflecting a multi-asset approach to capability building. In contrast, Wipro emerged as a clear outlier, with its dividend payout rising 83.62% to Rs 11,537.35 crore, from Rs 6,283.2 crore in FY25. The increase comes alongside the company’s announcement of a Rs 15,000-crore share buyback — its largest to date — which has received board approval and is awaiting shareholder nod. Excluding Wipro, the divergence becomes more pronounced. Total dividend payouts for the remaining companies fell 7.64% year-on-year to Rs 73,662.4 crore in FY26, from Rs 79,755.6 crore in FY25, underscoring the broader softness in shareholder returns. Infosys reported a comparatively modest increase in payouts, with dividends rising 8.83% year-on-year to Rs 19,430.4 crore in FY26. The company also stepped up acquisitions towards the end of the year, announcing deals worth up to $560 million (around Rs 5,100 crore) to acquire Optimum Healthcare IT and Stratus, to build AI capabilities in healthcare and insurance verticals, respectively.