Indian IT Sector Eyes AI-Driven Recovery Amidst Subdued Growth

The Indian IT sector is navigating through a phase of subdued growth, with industry expectations for FY26 remaining cautious. According to recent guidance and HSBC Global Research, the current muted outlook could turn around in FY27, fueled by a recovery in key export markets and increased technology adoption.

Near-term spending by clients remains weak; however, the momentum is anticipated to pick up in the next fiscal year, especially as AI adoption within enterprises accelerates. Although major Indian IT firms like TCS, Infosys, and HCLTech have reported strong pipelines, the year's revenue growth guidance remains conservative at 1-5 percent.

Despite challenges such as geopolitical tensions, supply chain issues, and specific industry constraints, AI is identified as a key growth driver. Expectations for FY27 include significant enterprise-scale AI adoption, poised to provide new opportunities for Indian IT firms amid stable macroeconomic conditions in the US and Europe.

(With inputs from agencies.)