Analysts suggest that DOGE’s jurisdiction primarily covers federal contracts, whilst Indian IT firms predominantly work with state and local governments.
The cancellation of federal contracts by the US
Department of Government Efficiency
‘s (
DOGE
), under Elon Musk‘s leadership, might affect consulting-focused technology firms working on discretionary US government projects. However, Indian IT companies are expected to face minimal impact from these changes.
According to the Everest Group, the
Indian IT services
sector receives a small fraction of annual US federal expenditure, comprising less than 2% of its yearly revenue. For the Indian IT industry, valued at over $280 billion, the exposure to US federal contracts remains below $6 billion, says an ET report.
Everest Group vice president Prashant Shukla noted, “In cases where Indian service providers have direct exposure to federal contracts, protective contractual clauses might require the US government to establish a special case for termination, such as termination for cause.”
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Analysts suggest that DOGE’s jurisdiction primarily covers federal contracts, whilst Indian IT firms predominantly work with state and local governments, thus remaining largely unaffected by DOGE’s decisions.
HFS Research data indicates that the US federal government allocates approximately $60 billion annually for consulting services.
Despite Wipro and US-based Cognizant maintaining substantial consulting operations, with the latter’s workforce primarily based in India, their exposure to US federal contracts remains limited. Analysts anticipate any impact on these companies to be negligible.
The US federal budget for 2025 has allocated $75 billion towards IT implementation at civilian agencies to enhance government service delivery. The President’s budget includes an additional $75 million for the technology modernisation fund, introducing an innovative funding approach to government IT utilisation.
Despite short-term uncertainties, Ramkumar Ramamoorthy, partner at tech growth advisory firm Catalincs, anticipates that DOGE’s initiatives will stimulate significant federal government technology expenditure, benefiting global technology organisations.
Companies with Indian heritage in IT services that have established robust public services operations stand to gain, along with organisations that have developed local talent and centres in the US through various means, according to Ramamoorthy. He additionally identifies prospects for small and medium-sized IT service providers.
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The establishment of a centralised technological framework within DOGE for monitoring spending impact, redistributing budget for infrastructure upgrades, system modernisation, utilising analytics and AI for operational enhancement, whilst building cyber resilience will enhance efficiency and innovation, he noted. This development could create opportunities for Indian IT sector.
Phil Fersht, CEO and chief analyst at HFS, indicated that alongside the Big 4 consultancies – KPMG, PwC, EY and Deloitte – DOGE’s initiatives might adversely affect Accenture Federal Services, IBM, Booz Allen, General Dynamics and others.
“Most of this work encompasses overall IT strategy and transformation infrastructure development, integration, data management, cloud migration and cybersecurity,” Fersht stated, noting that Indian outsourcing companies’ limited exposure might result in reduced impact.
