India’s IT sector was the market’s most dependable wealth creator for years. Stocks like Infosys and TCS built careers, created long-term wealth, and became a default choice for investors.
Today, that comfort is fading.
. And as the global tech rally is being driven by artificial intelligence, India’s IT companies are facing a tougher question, are they keeping pace, or falling behind?
The clearest signal is coming from the companies themselves.
Most estimates are clustered in a narrow 1–4% growth range in constant currency terms, a sharp contrast to the double-digit growth the sector was known for.
Infosys expects growth between 1.5% and 3.5%. The guidance disappointed the Street enough to push the stock to 52-week lows.
, while
Wipro has been the most cautious, guiding for a possible decline of up to 2% in the near term.
Put together, these numbers point to one thing, demand is still weak, and recovery is not immediate.
The issue is not a lack of opportunities, but hesitation.
Clients, especially in the US and Europe, are holding back discretionary tech spending. Instead of expanding budgets, they are focusing on efficiency and cost control.
At the same time, large deals are taking longer to close and even longer to scale up.
Global uncertainty is adding to this caution. Trade tensions, geopolitical risks, and a slow global recovery are making companies delay big decisions.
Artificial intelligence is at the centre of this transition.
There is clear progress. has crossed $2.3 billion in annualised AI revenue, while HCLTech is at around $620 million.
But here’s the gap.
AI revenues are growing, but they are still not large enough to offset the slowdown in traditional services. The real challenge is scale — converting AI conversations into large, revenue-moving deals.
That is where the market remains unconvinced.
Navy Vijay Ramavat, Managing Director at Indira Securities, believes the difference is already visible at a broader level.
“If you look at global markets like Nasdaq, they are hitting record highs because of AI. But India has missed that AI run.”
He points out that the impact is uneven.
“Our flagship sector, which took many Indians from lower-middle class to upper-middle class, is IT. That sector is now getting disrupted.”
“The positive impact of AI has not come to India, but the negative impact has.”
For decades, India’s IT story was built on scale, large teams delivering services at lower costs.
AI is beginning to change that.
Work that earlier needed hundreds of engineers can now be done with smaller, more skilled teams. That improves efficiency, but also reduces the need for volume-based outsourcing.
This is not an overnight disruption, but a gradual shift that could redefine how the sector operates.
Ramavat sees this as part of a larger cycle.
“In every bull run, new sectors emerge. Earlier it was IT in the 2000s, then real estate, then capital goods, then chemicals after Covid.”
Now, new themes are emerging again.
“Today, sectors like semiconductors, data centres and manufacturing are emerging,” he says.
“Wherever there is a government push, that sector tends to do well.”
For investors, the takeaway is not to exit IT entirely.
But it is also not a sector where you can invest blindly anymore.
Growth is slower, visibility is limited, and the transition to AI-led services will take time.
A more selective approach makes sense — focusing on companies that are actually building AI capabilities and winning meaningful deals, rather than relying on the sector as a whole.
The IT sector is not disappearing. But it is changing.
Over the next few years, it is likely to become leaner, more efficient, and more dependent on high-skill work rather than scale.
The real question is not whether India’s IT giants can survive.
It is whether they can adapt fast enough to stay relevant in a world where AI is rewriting the rules.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)