Nine brokerages indicated ahead of earnings releases that Indian IT companies are expected to report another quarter of subdued performance, weighed down by soft U.S. demand and persistent pressure on technology spending due to client holiday shutdowns.
Brokerages project that the top six Indian IT firms by revenue will see average revenue growth of about 4% year-on-year and profit growth of 5% in the December quarter, reflecting the ongoing weakness in demand; these companies had posted revenue growth of 6.5% year-on-year in the September quarter.
The last time Indian software exporters recorded double-digit revenue growth was in the March 2023 quarter—driven then by a surge in post-pandemic digital transformation, cloud service adoption, and remote work needs.
The broader $283 billion Indian IT industry continues to face multiple macroeconomic headwinds, including uncertainty in U.S. policy, challenges from proposed visa fees of up to $100,000, and clients cutting back spending due to concerns over the growth outlook of the world’s largest economy.
Indian IT companies derive a substantial portion of their revenue from the United States, making it a critical market for the sector.
Although industry bellwether Accenture recently beat Wall Street expectations with AI-driven demand, its unchanged growth outlook underscores the cautious near-term market sentiment.
While India has no pure-play AI companies yet, domestic IT firms are shaping their AI strategies through acquisitions and partnerships. Brokerages expect growth momentum in the AI space to build over the next six months, with related demand likely to pick up by 2026.
Abhishek Pathak, Research Analyst at Motilal Oswal Financial Services, said, "Amid macroeconomic and policy uncertainty, and the onset of a new technology cycle, clients remain cautious about increasing spending on large projects."
In 2025, U.S. policy uncertainty, visa concerns, and weak client spending drove foreign investors to pull a record $8.5 billion from Indian IT stocks—nearly half of the total foreign outflows from Indian equities.
The Nifty IT index fell 12.6% in 2025, making it the worst-performing sector, while Indian equity markets overall lagged behind Asian and emerging-market peers.
Tata Consultancy Services, India’s largest IT firm, will kick off the earnings season on January 12. The market expects its December quarter revenue to grow about 4.2% year-on-year, lower than the 5.6% growth reported in the same period last year.
Infosys and HCL Technologies are expected to post year-on-year revenue growth of 8.1% and 4.6%, respectively, compared with 7.6% and 5.1% growth in the prior-year period.
Most brokerages believe HCL Tech will not raise its FY26 revenue growth guidance of 2–3%, and Infosys is unlikely to revise its 3–5% revenue outlook upward.
Although the December quarter remains fundamentally weak for Indian IT firms, overall corporate earnings in Indian markets may improve, supported by tax cuts, policy easing, stabilizing growth, and moderate inflation.
Reduced working days due to global client holidays have hurt billable volumes and revenue; brokerages also noted that employee leave schedules and salary hikes at firms like TCS and Wipro have put pressure on margins.
However, six brokerages suggested that by mid-2026, resilience in the banking, financial services, and insurance sector, larger project deliveries, early signs of AI strategy maturation, and a weaker Indian rupee could provide support to the industry.