MUMBAI: The code may be getting smarter, but the earnings script is looking a little harder to crack. India’s leading IT services companies are expected to begin FY27 on a cautious note, with artificial intelligence-led pricing pressure, restrained client spending and global geopolitical uncertainty continuing to cloud the sector’s outlook, according to a Reuters report.
The earnings season kicks off with Tata Consultancy Services (TCS) on 9 July, followed by Infosys, HCLTech and Wipro later this month. While the April-June quarter typically benefits from a higher number of billing days and fresh project starts, analysts expect demand to remain subdued.
A Reuters compilation of estimates from nine brokerages projects that India’s six largest IT services firms will report around 14 per cent year-on-year revenue growth in rupee terms and a 12-13 per cent increase in net profit. However, analysts caution that much of the revenue growth is likely to be driven by the depreciation of the rupee rather than stronger business momentum. On a constant currency basis, which strips out foreign exchange effects, revenue growth is expected to be just 2.8 per cent.
Artificial intelligence continues to reshape the industry’s economics. As enterprises increasingly deploy AI tools and autonomous AI agents to improve productivity and reduce software development costs, traditional pricing models are coming under pressure. In response, Indian IT firms are accelerating investments in AI-led services and automation capabilities to stay competitive.
Brokerages remain cautious about the near-term outlook. Nomura described the sector as facing a “perfect storm”, pointing to AI-driven pricing pressure alongside geopolitical uncertainty in the Middle East. PL Capital said slower client decision-making and lengthening sales cycles were delaying project execution and revenue conversion across sectors including consumer, technology and telecom.
The changing business environment is also influencing workforce strategies. Companies have slowed hiring while redirecting investments towards AI capabilities. Reflecting the scale of this transition, TCS Chairman N. Chandrasekaran recently said the company could eventually have as many AI agents as employees.
Investors will also be closely watching management commentary and annual guidance. According to the Reuters report, several brokerages expect Infosys and HCLTech to narrow or trim the upper end of their revenue growth guidance if demand remains sluggish through the rest of the financial year.
The IT sector has already endured a difficult run in equity markets this year, with concerns over AI disruption, slower global technology spending and macroeconomic uncertainty weighing heavily on investor sentiment. As the earnings season unfolds, the industry’s ability to balance AI-driven transformation with sustainable growth is likely to remain the market’s biggest talking point.
