Pressmediaofindia
Related Articles
29-04-2026
Bureau Report + Agencies
NEW DELHI/ BENGALURU: Revenue growth for India’s top IT firms will stay muted this fiscal year, as gains from artificial intelligence would be blunted with clients cutting spending amid macroeconomic and geopolitical uncertainty, analysts said.
The Nifty IT index, the worst performing sector of 2026, shed roughly $26 billion in market value this week after earnings from market leaders Tata Consultancy Services and Infosys disappointed investors amid worries that agentic AI would disrupt the $315 billion sector and cannibalize earnings.
India’s top five IT firms are expected to post muted revenue growth of about 3%-4% in the near term, said Sushovan Nayak, analyst at Anand Rathi.
The sector, which employs about 5.9 million people, had last reported double-digit revenue growth in the March 2023 quarter. Analysts had expected a falling rupee to boost revenue by 10% across the sector.
The US, which accounts for more than half of the revenue at most large Indian IT firms, has seen softer deal pipelines, while uncertainty surrounding immigration and tariffs persists, and geopolitical conflicts further delay long‑term technology spending decisions.
The slowdown was the most acute in the banking and financial services, which is a key revenue driver for the sector.
TCS posted its first annual revenue decline in more than two decades, and said that new AI models and tools in the market did not hurt demand for its offerings.
Infosys, HCLTech and Wipro trimmed their forecast for fiscal 2027’s revenue growth.
Despite near‑term pressures, analysts remain confident that IT companies will eventually leverage AI to defend margins and unlock new growth opportunities.
“Revenue from AI is growing at a fast pace, but it’s coming off a very low base and is hardly 5% of total revenue,” said Centrum Broking’s Piyush Pandey, adding that AI was weighing on pricing, particularly in legacy contracts.
Given that, mid-sized IT firms such as LTM and Persistent Systems that have stronger digital and AI-led exposure may outperform, said Nayak.
The benchmark Nifty 50 is down 8.6% this year so far.
Shares of Tata Consultancy Services fell nearly 3% on Friday after a rare annual revenue drop outweighed strong deal wins and a quarterly earnings beat, suggesting sustained growth recovery remains elusive amid weak client spending and rising costs.
The stock was on track for its worst day in nearly a month and was set to snap a six-session gaining streak.
It was the third-biggest decliner on the IT index and the benchmark Nifty 50.
The IT index was down 2.2%, even as the Nifty 50 was trading 0.9% higher.
TCS beat fourth-quarter earnings estimates and reported $12 billion in deal wins, but analysts were disappointed by a 2.4% drop in its full-year dollar revenue, its first annual decline since listing.
Despite sequential improvement during the quarter, the full-year revenue drop underlined prolonged caution in clients’ technology budgets, said Dolat Capital.
Jefferies analysts echoed the view, saying the results offered limited evidence of any meaningful uptick in demand and that an uncertain growth outlook could drive underperformance in the stock.
US-listed shares of TCS’ smaller rivals Infosys and Wipro also lost nearly 2% overnight while TCS’ margins edged up 10 basis points during the quarter, analysts cautioned that upside could be limited.
BOBCaps said higher subcontracting costs, wage hikes and continued investments in AI platforms could cap near-term margin expansion.
