Just three months into the fiscal year, analysts are already questioning whether Indian IT’s Big Five can meet the full-year guidance they laid out in April after Accenture fell short of expectations.
At least four analysts expect slower full-year growth as a double whammy of AI-led automation fears and geopolitical tensions in West Asia has dampened investor sentiment.
“From what we see right now, FY27 might not be better than the preceding year. The recovery the sector expected at the start of the year might not be the case anymore because of the prolonged impact of the war,” said Amit Chandra, vice-president at HDFC Securities.
While Ltd outlined slower growth for 2026-27, Infosys Ltd expected faster growth. Wipro Ltd guided for a revenue decline in the June quarter, though the drop was less severe than anticipated.
Infosys and HCLTech provide annual guidance, Wipro issues quarterly forecasts, and Tata Consultancy Services Ltd and Tech Mahindra Ltd do not offer formal guidance. The companies will announce their first-quarter earnings in July.
Both Infosys and HCLTech have hinted at revenue deflation due to AI in FY27. In April’s post-earnings calls, HCLTech’s management said it might face 2% to 3% deflation, and Infosys’s management said the compression is typically in areas where AI foundation models and certain tools are highly efficient.
Automation has eaten into IT firms’ revenues and sent the share prices of the Big Five plunging more than 30% since the start of the year.
The double whammy
Plc, the world’s largest IT services company, on 18 June trimmed the upper end of its full-year revenue growth guidance to 4% from 5%, narrowing the range to 3-4% as new order bookings in its traditional IT services business weakened. About 1.5 percentage points of the projected growth is expected to come from acquisitions.
The company reported new orders worth $19.3 billion, its lowest in the last six quarters.
The Dublin, Ireland-based company, which follows a September-August fiscal year as against Indian IT’s April-March, ended the third quarter with $18.7 billion in revenue, up 3.74% quarter-on-quarter and 6% year-on-year.
“One of the things that we’re really focused on is expanding our TAM (total addressable market) in other ways, right? Because the budgets haven’t been, even with AI, they’re spending it differently, but they haven’t been increasing,” said Julie Sweet, Accenture’s chief executive, during the company’s post-earnings analyst call on Thursday.
Bank of Baroda analysts Girish Pai and Lopa Notaria said in a 19 June note that “if you combine the weakness that ACN is indicating in 2HFY26 with recent commentary of Cognizant CFO (that there is no acceleration in demand near term), one concludes that FY27 for the Indian IT service industry would be weaker than what the Street anticipated post 4QFY26.”
Much of this uncertainty stems from advancements in AI tools, which are no longer limited to automating tasks like coding and call support but are now used to develop software and even to craft entire sales pitches. This is prompting clients to rethink their engagement with .
A third analyst attributed the dampened growth outlook to tensions in West Asia that have forced companies to hold off on tech spending.
“FY27 large-cap organic growth may be weaker than last year, exacerbated by the inflationary macro environment and the second-order effects of the prolonged Middle East Conflict on sectors such as autos, manufacturing, etc., with acquisitions to drive incremental growth,” said Sushovon Nayak, lead IT analyst at Anand Rathi Institutional Equities.
Nayak added that the IT services sector is expected to consolidate post a muted Q1FY27.
This comes as Indian tech services firms have had their most acquisitive year. Since 1 April 2025, Indian IT’s Big Five have spent more than $5 billion in acquisitions.
A fourth brokerage expected AI-led revenue deflation of up to 3-3.5% annually over the next three years. “Differential model capability improvement in software and nonsoftware-related tasks, together with what appears to be a faster pace of improvement in software tasks than expected, can increase AI disruption risks for IT services firms,” said Kotak Institutional Equities analysts Kawaljeet Saluja, Sathishkumar S., and Vamshi Krishna, in an 11 June note.
FY27 guidance
In April, Infosys, the second-largest Indian IT outsourcer, expected full-year growth of 1.5-3.5% in constant currency terms, higher than the 0-3% growth outlined for FY26 in April 2025. It ended the last fiscal year with $20.16 billion in revenue, up 3.1% in constant currency from the preceding year, with acquisitions contributing about 25 basis points to revenue growth. Constant currency does not account for currency fluctuations.
Similarly, Wipro, India’s fourth-largest IT player, expected a revenue decline of up to 2% in constant currency in the first quarter of the fiscal year, compared to a year ago when it anticipated a decline of 1.5-3.5%. Wipro ended FY26 with $10.48 billion, down 0.3% year-on-year.
HCLTech, India’s third-largest IT company, expects a tepid year. Its management expected growth between 1-4% in constant currency, compared to 2-5% growth outlined in April 2025. It ended the last fiscal year with $14.66 billion, up 4% from a year ago in constant currency terms.
Neither HCLTech nor Wipro shared the contribution from acquisitions to their revenue growth.