India’s leading information technology firms are expected to report another modest quarter, as sluggish demand from the U.S. and client shutdowns during the holiday season continue to affect tech spending, according to nine brokerages ahead of earnings reports.
Analysts forecast that the top six IT companies in India will see around 4% year-on-year revenue growth and a 5% increase in profit for the December quarter, on average. This reflects a prolonged slowdown in demand, compared to a 6.5% revenue growth in the previous quarter. Indian software exporters last saw double-digit revenue growth in the March quarter of 2023, fueled by a surge in digital transformation, cloud adoption, and remote work in the post-pandemic period.
The broader Indian IT industry, valued at $283 billion, continues to face various challenges, including uncertainty over U.S. tariffs, proposed $100,000 visa fees, and subdued client spending amid concerns about economic growth in the United States.
The U.S. remains a vital market for India’s IT companies, with a significant portion of their revenue coming from the world’s largest economy. While Accenture, a key player in the sector, recently posted earnings that exceeded Wall Street expectations thanks to AI-driven demand, its unchanged growth outlook points to caution in the near term.
Despite India not having any AI-focused firms, its IT companies are beginning to develop AI strategies through acquisitions and partnerships. Brokerages expect AI momentum to increase over the next six months, with demand picking up into 2026.
“Clients remain hesitant to commit extra spending to large programs amid macroeconomic and tariff uncertainties, as well as the start of a new technology cycle,” said Abhishek Pathak, research analyst at Motilal Oswal Financial Services.
Concerns about U.S. tariffs, visa issues, and weak client spending led to a record $8.5 billion in foreign outflows from Indian IT stocks in 2025, accounting for nearly half of total foreign exits from Indian equities. The Nifty IT index fell 12.6% last year, making it the worst-performing sector as Indian markets lagged behind their Asian and emerging-market counterparts.
Tata Consultancy Services (TCS), India’s largest IT firm, will kick off the earnings season on January 12. Revenue growth is expected to be about 4.2% year-on-year, slower than the 5.6% growth recorded the previous year. Infosys and HCLTech are forecast to report year-on-year revenue growth of 8.1% and 4.6%, respectively, compared to 7.6% and 5.1% in the previous year.
Most brokerages do not expect HCLTech to increase its fiscal 2026 revenue forecast of 2%-3%, nor Infosys to raise its forecast of 3%-5%. Earnings for domestic equities in the December quarter are expected to improve due to tax cuts, policy easing, stable growth, and moderate inflation, although IT firms are still facing structural weaknesses.
Fewer working days due to global client holidays are expected to affect billing and revenue, while brokerages have also flagged margin pressure from furloughs and wage hikes at firms like TCS and Wipro.
However, analysts see potential support for IT companies by mid-2026, driven by resilience in the banking, financial services, and insurance (BFSI) sector, ramp-up of new deals, the early stages of AI strategy development, and rupee depreciation. Six brokerages mentioned these factors as possible sources of support in the latter half of 2026.