Indian IT firms face muted Q1 as AI shift, weak demand weigh

By Haripriya Suresh and Bharath Rajeswaran

BENGALURU, July 6 (Reuters) - India's apical accusation exertion companies are expected to study different subdued quarter, arsenic AI-driven pricing pressure, anemic lawsuit spending, and ‌global geopolitical turmoil proceed to measurement connected growth, 9 brokerages said.

The April-to-June 4th is usually ‌a beardown 1 for India's $315 cardinal IT sector, helped by higher billing days and caller task starts, but analysts expect a ​slow commencement to the fiscal twelvemonth that would propulsion backmost hopes of a recovery.

India's largest IT services company, Tata Consultancy Services, kicks disconnected net connected Thursday with peers Infosys, HCLTech and Wipro reporting aboriginal this month.

While India's apical six IT firms are expected to study astir 14% year-on-year gross maturation successful rupee presumption with ‌net nett rising 12%-13%, this would mostly ⁠be owed to the interaction of crisp rupee depreciation. Stripping retired speech complaint effects, the companies are expected to station a specified 2.8% gross maturation successful constant-currency ⁠terms.

Citi expects a 4th consecutive twelvemonth of subdued maturation for Indian IT firms, portion JPMorgan sees gross maturation staying beneath 3%-4% for the "foreseeable future".

The IT assemblage is racing to accommodate to changing lawsuit needs arsenic companies crossed ​the ​globe measurement up the usage of AI tools and ​agents to chopped costs and quicken bundle improvement ‌cycles.

Software firms person slowed hiring, with TCS Chairman N Chandrasekaran saying the "day is not far" erstwhile the institution would person an adjacent fig of AI agents and employees.

Indian IT firms are successful a "perfect storm," Nomura said successful its net preview, with Middle East conflict-led uncertainty compounding AI-driven pricing pressure.

Fears that AI would disrupt the IT sector's traditional, labour-intensive concern exemplary dragged the Nifty IT scale down 9.5% successful the ‌June 4th adjacent arsenic India's benchmark Nifty 50 gained 6.9%.

The ​IT scale has slumped astir 28% truthful acold successful 2026, ​making it the worst-performing large assemblage successful ​India.

The interaction of AI-led disruption and weakness successful lawsuit spending volition beryllium broad-based, according ‌to PL Capital, with effects disposable successful ​the consumer, hi-tech, and telecom ​verticals.

"Slower decision-making and elongated income rhythm are starring to delays successful gross conversion and execution," the brokerage said successful a note.

Annual gross forecasts volition beryllium a cardinal absorption for investors. Brokerages ​say Infosys and HCLTech could constrictive ‌or trim the precocious extremity of their forecasts.

Potentially higher involvement rates successful the U.S., which ​makes up astir 60% of Indian IT firms' revenue, besides loom.

(Reporting by Haripriya Suresh ​and Bharath Rajeswaran successful Bengaluru; Editing by Mrigank Dhaniwala)