Top IT firms set for modest Q2 revenue growth and steady margins

India's leading tech service providers are expected to post muted revenue growth and stable margins for the July-September second quarter. The earnings season opens with Tata Consultancy Services on October 8, followed by HCLTech on October 12 and Infosys on October 23. Research advisory UnearthInsight projects top-five firms to grow by 0.5 to 1 per cent quarter-on-quarter, showing little change from the April-June period.

Expert Views

Client budgets remain tight due to ongoing geopolitical tensions, keeping discretionary spending restricted. UnearthInsight founder and CEO Gaurav Vasu notes that decision cycles will stay long for the next 12 to 18 months, though bookings remain strong. On the other hand, Gartner views the quarter as somewhat stronger on past contracts turning into revenue. Gartner senior principal analyst Biswajit Maity highlights that cautious spending and a focus on productivity continue to shape purchasing choices.

Outlook and Margins

UnearthInsight keeps its full-year growth estimate at 3 to 4 per cent for top firms, driven largely by inorganic growth. The tech services industry has spent USD 3.6 billion across 14 merger and acquisition deals so far in fiscal year 27. Margins face pressure from wage hikes, AI investments, and clients demanding pricing concessions, though platforms and applications will act as cushions.

Context

Major IT service providers in India rely heavily on international client spending, making them sensitive to global economic shifts and foreign budget cycles. Emerging technologies like artificial intelligence alter traditional service delivery models, forcing companies to adapt their offerings to meet changing client productivity demands.