India’s biggest information technology companies are bracing for yet another underwhelming quarterly performance, as the rise of artificial intelligence, cautious client budgets, and ongoing geopolitical instability continue to drag on the sector, according to nine brokerages.
The April-through-June period is traditionally one of the stronger quarters for India’s $315 billion IT industry, typically boosted by more billing days and the launch of new projects. However, analysts are now warning that a slow start to the fiscal year could push any meaningful recovery further down the road.
Tata Consultancy Services, India’s largest IT services company, is scheduled to kick off the earnings season on Thursday, with fellow tech giants Infosys, HCLTech, and Wipro set to follow later in the month.
India’s top six IT firms are projected to show roughly 14% year-over-year revenue growth in rupee terms, with net profits climbing 12% to 13%. However, analysts caution that those figures are largely inflated by a sharp drop in the value of the rupee. When exchange rate effects are removed, the actual revenue growth in constant-currency terms is expected to be just 2.8%.
Citi is forecasting a fourth consecutive year of sluggish growth for the sector, while JPMorgan has warned that revenue growth is likely to remain below 3% to 4% for the “foreseeable future.”
The broader IT industry is scrambling to keep pace with shifting client demands, as businesses around the world increasingly turn to AI tools and automated agents to reduce costs and speed up software development.
Hiring across the sector has slowed considerably. TCS Chairman N Chandrasekaran noted that the “day is not far” when his company would have as many AI agents working alongside it as human employees.
Investment firm Nomura described Indian IT companies as being caught in a “perfect storm,” with uncertainty stemming from Middle East conflict adding to the pressure already created by AI-driven pricing changes.
Concerns that AI could upend the IT sector’s traditional labor-heavy business model sent the Nifty IT index down 9.5% during the June quarter, even as India’s broader Nifty 50 benchmark rose 6.9% over the same period. The IT index has now fallen approximately 28% so far in 2026, making it the worst-performing major sector in the country.
According to PL Capital, the effects of AI disruption and reduced client spending will be felt broadly across consumer, high-tech, and telecom segments. The brokerage noted in a recent report that “slower decision-making and elongated sales cycles are leading to delays in revenue conversion and execution.”
Annual revenue guidance will be closely watched by investors this earnings season. Several brokerages believe Infosys and HCLTech may scale back or narrow the upper end of their full-year forecasts.
Adding further uncertainty, the possibility of higher interest rates in the United States — which accounts for roughly 60% of Indian IT firms’ total revenue — continues to loom over the sector’s outlook.
