Meta and Google are tightening technology budgets by reducing the size of existing IT services contracts with companies such as HCLTech and Accenture. The companies are reallocating money to build AI infrastructure and expand data centre capacity.
Google has cut nearly $50 million from its $200 million annual contract with HCLTech. The IT services provider handled part of Google’s application development and engineering work. The cut is part of a broader cost‑efficiency programme that sees Google reshaping budgets for AI‑focused spending.
Around 1,000 employees are affected by the reduction, and they will be moved to other projects within Google.
Meta has also reduced its spending on IT services. The company cut the Wipro deal by $15‑$20 million and partially ended contracts with Accenture, Teleperformance and Concentrix. Meta treats Wipro as a strategic vendor for managed services.
Both Google and Meta’s moves come after reports that Meta’s free cash flow fell 91 % in the second quarter, dropping to $784 million from $8.55 billion a year earlier. The decline sent Meta shares down 10 % in after‑hours trading.
Meta’s CEO Mark Zuckerberg said the company expects a large portion of its compute power to go toward training models, growing its core business and delivering personal AI agents.
Alphabet, Google’s parent company, has increased its capital expenditure guidance for 2026 to $195‑$205 billion, up from $180‑$190 billion. The hike reflects the growing demand for AI products and infrastructure.
Alphabet reported $44.9 billion in CapEx for the second quarter ended June. About 60 % of that spent on technical infrastructure went to servers, while 40 % went to data centres and networking.
Wipro’s CEO Srini Pallia noted that market demand has not changed, but clients are cutting discretionary spend to invest in AI. This shift is making budgets tighter across the industry.