India’s IT Sector Expected to Grow a Modest 0–2 % in FY26
India’s information technology services sector is projected to experience flat to slight growth in FY26. According to a recent report by CareEdge Ratings, constant‑currency revenue growth is expected to hover between 0–2 %, effectively translating to a nominal revenue rise of 3–5 % year-on-year.
Muted Demand and Deal-Making Challenges
The sector faces headwinds, including macroeconomic uncertainty, client delays in discretionary spending, and global geopolitical tensions impacting business decisions. However, the pipeline of upcoming deals and digital transformation initiatives—especially in AI, cloud, cybersecurity, and analytics—is expected to provide some offset.
Industry Guidance and Peer Forecasts
Top-tier IT firms are likely to issue cautious revenue guidance in the 2–5 % constant-currency range, echoing brokerage expectations from Motilal Oswal. This aligns with similar predictions from agencies like ICRA, which estimate a modest 2–3 % growth for the sector.
Strategic Investment in Future Tech
Despite a soft Near-term outlook, companies are accelerating investments in generative AI, cloud infrastructure, ER&D, and ESG tech. Persistent cost controls and consolidation among global clients are expected to shape demand in background of slower discretionary budgets.
Outlook & Implications
- Nominal growth: 3–5 % projected FY26 revenue increase
- Constant currency growth: Flat to low-single digits (0–2 %)
- Drivers: Deal wins, digital transformation, AI adoption
- Risks: US/eurozone macro volatility, discretionary spending delays
This cautious outlook reflects both cyclical pressures and strategic investments, suggesting resilience but limited upside in the near term.
For continued coverage of India’s IT sector performance, visit gpsc-ojas.com/news/.
