Demand in India’s information technology (IT) industry remained uncertain during the third quarter of FY26 (October–December 2025), as pressure on discretionary spending forced companies to depend on cost-cutting and efficiency-driven strategies to sustain growth. The impact of this slowdown is expected to be reflected in the upcoming quarterly results.
According to Bloomberg estimates, revenue growth for the country’s top six IT companies is likely to remain modest, ranging between 1 per cent and 4 per cent sequentially, although some improvement may be visible on a year-on-year basis. The October–December quarter is typically weak for IT firms due to a higher number of holidays in key markets such as the United States and Europe.
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Despite muted near-term performance, investors and analysts are expected to closely monitor companies’ artificial intelligence (AI) strategies, particularly whether AI-led initiatives are yielding sustainable revenue streams. There will also be scrutiny of investments, partnerships, and acquisitions in the AI space. TCS has announced two acquisitions and entered the data centre business, Wipro has acquired Harman’s DTS business, and Coforge has purchased Ancora, with several other companies pursuing inorganic growth.
A research note by Motilal Oswal observed that major large language model developers such as OpenAI and Claude have begun forming constructive partnerships with system integrators. According to the report, this has helped the AI services layer gradually take institutional shape. It added that momentum in this segment is expected to accelerate over the next six months, with AI services demand likely to pick up meaningfully in calendar year 2026.
Beyond AI, analysts will also focus on client budget trends, exposure to H1-B visa policies, and updates on discretionary spending. According to UnearthInsights, India’s technology industry is projected to grow 3 to 5 per cent in the current financial year. While this would push the industry size beyond $290 billion, it may still fall short of Nasscom’s $300 billion target.
UnearthInsights founder and CEO Gaurav Basu said that recession concerns in the US economy, elevated interest rates, and a weak job market have led many companies to postpone discretionary IT spending. He cautioned that stricter visa policies could reduce IT services growth from 1 per cent to negative 1 per cent in FY27.
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On the profitability front, the depreciation of the rupee could offer some relief. The rupee has weakened by around 4.7 per cent against the US dollar in 2025, recently crossing the 91 level. However, analysts noted that much of this benefit may be offset by wage hikes and merger-and-acquisition-related expenses.
Meanwhile, market participants are also tracking generative AI bookings. So far, only TCS and HCL Tech have disclosed AI revenue figures, with TCS reporting AI revenue of $1.5 billion. The IT earnings season will begin with TCS on January 12, followed by Infosys on January 14 and Wipro on January 16.
