New Delhi: Indian IT companies are expected to report a weak quarter for July to September, despite the period usually being strong for business. Slow deal wins, cautious clients and limited spending on optional technology projects are likely to weigh on growth, analysts said.
HDFC Securities said global economic uncertainty continues to delay client decisions. Companies also face pricing pressure as customers seek a share of savings generated by artificial intelligence in new contracts and renewals.
Growth Expectations Stay Modest
The brokerage expects quarterly revenue growth for large IT companies to range from a decline of 0.4 per cent to an increase of 2 per cent in constant currency terms, which exclude exchange rate movements.
Mid-sized companies could post growth of 0.6 per cent to 6.3 per cent, with acquisitions supporting some of the gains.
With the first half falling short of expectations, any recovery in FY27 now depends on the second half. However, the third quarter usually sees fewer working days because of client holidays and temporary work breaks, limiting optimism.
AI Savings Put Pressure On Pricing
IT companies say businesses still find it difficult to directly deploy generative AI in complex systems and tightly regulated industries. This keeps technology service providers important for integrating new tools with existing operations.
According to the note, fresh AI-focused deals are helping offset an expected 6 to 7 per cent reduction in revenue from AI-driven efficiencies. However, converting these opportunities into business remains slow.
New contracts increasingly link payments to results, while renewals often come at lower prices.
Rupee Offers Some Relief
A weaker rupee, better operating efficiency and higher staff utilisation could help absorb salary increases.
Although valuations are near historical lows and cash generation remains attractive, concerns over AI-related revenue pressure continue to weigh on investor confidence.
Analysts expect sentiment to remain fragile, with rising global bond yields, stronger crude prices and heavy foreign investor selling adding pressure on Indian equities.
