AI pressure, client caution cloud Indian IT's September-quarter earnings
India's top IT firms face another weak quarter as AI-driven pricing pressure and tepid client spending bite, with brokerages expecting trimmed revenue growth forecasts and the Nifty IT index down about 27% in 2026.
India’s top IT companies are set to report another quarter of weak earnings and could trim their annual revenue growth forecasts, five brokerages told Reuters, as AI-driven pricing pressure and tepid client spending bite.
The $315-billion information technology sector has been battered by the rise of AI-based technology, with its reliance on billable hours leaving it especially vulnerable. Companies have been forced to rejig business models and offer steep discounts, making the sector one of the market’s worst performers over the past year.
“AI-led deflation has more legs to go and demand environment is not improving,” Jefferies said in a note on Tuesday, citing additional pressure from higher oil prices and interest rates.
Tata Consultancy Services kicks off the earnings season on October 8, with Infosys, HCLTech and Wipro reporting later in October. Jefferies expects the July–September quarter — the industry’s weakest sequential performance in three years — to bring 0.7% to 3.5% quarter-on-quarter revenue growth for the top six firms, with revenue up about 10% year-on-year in rupee terms.
Kotak analysts expect Infosys to trim the upper end of its 1.5%–3% revenue growth forecast to 2.5%, while Jefferies sees a sharper cut to 0.5%–2%. Margins may improve modestly as rupee depreciation offsets some pricing pressure.
The Nifty IT index has dropped about 27% in 2026 so far, against a 13.4% fall for the benchmark Nifty 50. The sector employs nearly 6 million people.
Sources
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