India Top IT Firms Eye Muted Q2 Growth Amid Tight Budgets And AI Pressure

India's top five IT companies are expected to report modest revenue growth between 0.5 and 1 per cent for the second quarter of FY27, showing little improvement over the April-June period. Research advisory UnearthInsight and Gartner note that clients continue to keep discretionary budgets tight due to geopolitical tensions and long decision cycles.

Earnings Schedule And Outlook

Tata Consultancy Services kicks off the Q2 earnings season on October 8, followed by HCLTech on October 12 and Infosys on October 23. UnearthInsight maintains its full-year growth estimate of 3 to 4 per cent for top firms, noting that much of this will come from inorganic growth rather than demand revival. The tech services industry has spent 3.6 billion US dollars across 14 merger and acquisition deals so far in FY27, while UnearthInsight expects a slight recovery to around 6 per cent growth in FY28.

Market Demands And AI Impact

UnearthInsight Founder and CEO Gaurav Vasu states that bookings remain strong but take longer to convert into revenue, with decision cycles staying long for the next 12 to 18 months. Gartner Senior Principal Analyst Biswajit Maity points out that client spending prioritises measurable business outcomes, cost optimisation, and risk reduction. Meanwhile, AI deflation is affecting traditional services, with AI-led revenue remaining under 5 per cent of the total industry. Infosys reported AI-related revenue at 8.2 per cent of its total revenue in the June quarter, while TCS reported annualised AI revenue of 2.6 billion US dollars.

Context

India's major IT services providers rely heavily on global markets such as the US and Europe for the bulk of their export revenue. Economic shifts, currency movements, and corporate technology spending trends in these key western regions directly influence domestic tech sector earnings and growth trajectories.