IT Faces Tough Times Again..Q1 Brings More Disappointment

India's IT services sector is expected to witness another sluggish quarter in Q1 of FY2026-27, according to a report by Equirus Securities. The brokerage estimates that revenue growth will remain weak, with a possible decline of up to 1.7% sequentially. Even in a positive scenario, growth is unlikely to exceed 1.1%.

The report attributes the slowdown to uncertainty surrounding technology investments and the adoption of AI tools. Many global clients are delaying fresh IT spending as they remain unsure about the long term returns on AI investments, affecting the revenue outlook for Indian IT companies.

Among large cap firms, Wipro is expected to face the biggest impact, with revenue likely to decline by around 2%, while Tech Mahindra may also remain under pressure. However, mid-sized companies such as Persistent Systems, Mphasis, and eClerx are expected to deliver relatively better growth. Despite the current slowdown, demand for AI, enterprise data platforms, and advanced technology solutions is expected to support long term growth.