Indian IT firms may post muted Q1 FY27 growth as clients prioritise cost-cutting.
Equirus expects weak revenue growth, with margins supported by a weaker rupee.
Long-term AI adoption and cloud transformation remain key growth drivers for IT services.
India's top IT services companies are projected to record a muted performance in the first quarter of FY27. An Equirus Securities report stated that clients continue to prioritise cost-cutting over large-scale technology expenditures. This cautious approach is keeping discretionary tech spending under intense pressure.
Macroeconomic uncertainty and geopolitical risks will likely keep demand measured throughout the financial year. The brokerage stated that growth visibility depends heavily on future investments in artificial intelligence-led transformation programmes, moving beyond current cost optimisation projects.
1 June 2026
Get the latest issue of Outlook Business
Subdued Revenue Growth Projected
The top six large IT companies are anticipated to report constant-currency organic US dollar revenue growth ranging from a 1.7% decline to a 1.1% increase quarter-on-quarter. Wipro is projected to remain at the lower end of this spectrum for its IT services business. Tech Mahindra is expected to lead growth among its peers.
Reported constant-currency consolidated dollar revenue will likely range from a 1.1% decline to 1.7% growth quarter-on-quarter. Cross-currency headwinds could reduce this growth by up to 30 basis points.
Enterprises are accelerating AI initiatives, the report stated. However, they are funding these moves through productivity gains and vendor consolidation rather than increasing overall IT budgets, limiting near-term revenue expansion.
Margins and Company Guidance
Earnings margins are expected to remain resilient despite weak demand. A nearly 3% quarter-on-quarter depreciation in the average rupee-dollar exchange rate will support this stability. Lower supply-side pressures, continued cost optimisation and productivity improvements are also contributing factors.
Equirus stated that Infosys is expected to revise its FY27 constant-currency revenue growth guidance to 2.8-4.3%, excluding its Vertex acquisition. The firm will retain its EBIT margin guidance of 20-22%.
HCLTech will likely maintain its 1.5-4.5% constant-currency services growth guidance and 17.5-18.5% EBIT margin outlook. Wipro is projected to guide for a 2 per cent decline to flat quarter-on-quarter growth for its IT services business in the second quarter.
AI Drives Long-Term Demand
Equirus stated that information technology service providers will continue to play a crucial role in enterprise AI adoption despite the near-term slowdown. Demand for legacy modernisation, cloud migration, data engineering and cybersecurity will support long-term opportunities.
Enterprise AI architectures are becoming increasingly complex. Organisations are deploying a hybrid mix of large language models, small language models and AI agents. This shift drives significant demand for system integration expertise.
While valuations for IT stocks have corrected significantly so far in 2026, Equirus said meaningful improvement in stock multiples will depend on stronger growth visibility beyond the current quarter.
