India’s top information
technology companies are expected to report another subdued
quarter, as AI-driven pricing pressure, weak client spending,
and global geopolitical turmoil continue to weigh on growth,
nine brokerages said.
The April-to-June quarter is usually a strong one for
India’s $315 billion IT sector, helped by higher billing days
and new project starts, but analysts expect a slow start to the
fiscal year that would push back hopes of a recovery.
India’s largest IT services company, Tata Consultancy
Services, kicks off earnings on Thursday with peers
Infosys, HCLTech and Wipro
reporting later this month.
While India’s top six IT firms are expected to report around
14% year-on-year revenue growth in rupee terms with net profit
rising 12%-13%, this would largely be due to the impact of sharp
rupee depreciation. Stripping out exchange rate effects, the
companies are expected to post a mere 2.8% revenue growth in
constant-currency terms.
Citi expects a fourth straight year of subdued growth for
Indian IT firms, while JPMorgan sees revenue growth staying
below 3%-4% for the “foreseeable future”.
The IT sector is racing to adapt to changing customer needs
as companies across the globe step up the use of AI tools and
agents to cut costs and quicken software development cycles.
Software firms have slowed hiring, with TCS Chairman N
Chandrasekaran saying the “day is not far” when the company
would have an equal number of AI agents and employees.
Indian IT firms are in a “perfect storm,” Nomura said in its
earnings preview, with Middle East conflict-led uncertainty
compounding AI-driven pricing pressure.
Fears that AI would disrupt the IT sector’s traditional,
labour-intensive business model dragged the Nifty IT index
down 9.5% in the June quarter even as India’s
benchmark Nifty 50 gained 6.9%.
The IT index has slumped about 28% so far in 2026, making it
the worst-performing major sector in India.
The impact of AI-led disruption and weakness in client
spending will be broad-based, according to PL Capital, with
effects visible in the consumer, hi-tech, and telecom verticals.
“Slower decision-making and elongated sales cycle are
leading to delays in revenue conversion and execution,” the
brokerage said in a note.
Annual revenue forecasts will be a key focus for investors.
Brokerages say Infosys and HCLTech could narrow or trim the
upper end of their forecasts.
Potentially higher interest rates in the U.S., which makes
up about 60% of Indian IT firms’ revenue, also loom.