Key Takeaways
- Indian IT firms see a 1.7% decline to a 1.1% growth range
- Cautious enterprise spending delays discretionary technology investments across sectors
- A 3% rupee depreciation supports margins despite weak revenue growth
India’s IT services sector is expected to report a soft performance in the June quarter of FY27, as enterprises continue to limit discretionary technology spending amid global uncertainty and evolving AI adoption trends. Industry estimates indicate muted growth across major companies, reflecting cautious client behavior.
Weak Demand And Delayed Spending Impact Quarterly Growth
According to industry estimates, the top six Indian IT services companies are likely to report constant currency US dollar revenue performance ranging from a 1.7% decline to 1.1% growth on a quarter-on-quarter basis. This narrow range highlights the slowdown in enterprise spending.
Among large companies, Wipro IT Services is expected to report performance at the lower end of the range, while Tech Mahindra may lead growth within the segment. Mid-sized firms such as Persistent Systems, Mphasis, and eClerx are projected to deliver relatively stronger organic growth compared to larger peers.
Enterprises are continuing to defer discretionary technology investments, focusing instead on cost control and operational efficiency. This has led to delays in deal closures and slower project ramp-ups across key markets.
Industry guidance suggests that the first quarter of FY27 will remain weak, with demand recovery dependent on clearer returns from ongoing AI investments. Companies are also expected to provide cautious outlooks for the coming quarters.
AI Focus And Currency Trends Provide Margin Support
Despite weak revenue growth, margin performance across major IT firms is expected to remain stable. A key factor supporting margins is a 3% depreciation of the Indian rupee against the US dollar during the quarter.
In addition, supply-side conditions and productivity improvements are helping companies maintain profitability levels. Enterprises are prioritising AI-driven transformation programs that focus on cost optimisation, outsourcing, and vendor consolidation rather than increasing overall technology budgets.
IT service providers continue to play a central role in enabling enterprise AI adoption. Their work includes legacy system modernisation, data engineering, selective cloud implementation, and strengthening cybersecurity frameworks.
The complexity of enterprise AI environments is also increasing, with companies deploying a mix of large language models, smaller models, and multiple AI agents. This trend is expected to increase demand for system integration and management services.
Company-specific expectations indicate that Infosys may guide for 2.8% to 4.3% revenue growth in the first quarter of FY27, while HCLTech is expected to maintain its current guidance. Wipro may project a 2% decline to flat sequential growth for the September quarter.
Global signals remain cautious, with slower decision-making and weaker bookings, trends influencing the outlook across the sector. Analysts expect sector valuations to remain measured unless consistent growth visibility improves beyond the June quarter.
Overall, the Indian IT sector enters the first quarter of FY27 with muted demand conditions, steady margins, and increasing focus on AI-led transformation as a driver of future growth.
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