Indian IT Firms Brace for Subdued Q4 as AI Concerns and Global Uncertainty Weigh

India’s top IT companies are expected to report a muted fourth quarter, with modest growth driven largely by a weaker rupee amid global tensions and cautious client spending trends.

April 6 | Bengaluru: India’s leading information technology companies are likely to post a subdued performance for the fourth quarter of FY2026, as global uncertainties, cautious client spending, and concerns around artificial intelligence continue to weigh on growth prospects. According to multiple brokerage estimates, revenue and profit for top IT firms are expected to grow by around 10% year-on-year. However, this growth is largely attributed to the depreciation of the Indian rupee rather than strong underlying demand. The rupee weakened by nearly 4% against the US dollar during the March quarter, boosting earnings for export-driven IT firms that bill clients in foreign currencies.

Major companies including Tata Consultancy Services, Infosys, HCLTech, Wipro, and Tech Mahindra are set to announce their quarterly results starting April 9. Analysts expect limited deal wins and uneven growth across sectors, with stronger performance in banking and financial services, while segments such as retail, healthcare, and technology may face continued pressure due to reduced discretionary spending. Industry experts highlight that client budgets have remained largely unchanged, with businesses prioritising cost optimisation and AI-led investments over traditional IT services. This shift has led to longer deal cycles and slower revenue momentum across the sector. On a constant currency basis, revenue growth is expected to remain modest, reflecting the underlying slowdown.

Investor sentiment has also been impacted, with IT stocks declining significantly in recent months amid fears that advanced artificial intelligence technologies could disrupt conventional outsourcing models. Analysts suggest that future growth will largely depend on how companies adapt to emerging AI trends and provide clarity on their revenue outlook for FY2027. Despite near-term challenges, the sector continues to benefit from global demand for digital transformation services. However, experts believe that sustained recovery will depend on improved macroeconomic conditions and stronger client spending in the coming quarters.

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