Indian IT companies are expected to see moderate revenue growth of 4-6% in FY26, with hiring likely to remain subdued until growth momentum picks up later in the fiscal year, according to credit rating agency ICRA. The agency also projected attrition levels to average around 12-13% in the near term.
ICRA estimates that its sample set of Indian IT services firms, which accounts for approximately 60% of the industry’s revenue, will achieve 4-6% growth in US dollar terms in FY26. This follows a 3.6% year-on-year revenue increase recorded during the first nine months of FY25, driven in part by a lower base from FY24. A slight rise in discretionary spending by BFSI and retail clients in select markets, along with investments in Generative AI (GenAI) initiatives, also supported this recovery.
Deepak Jotwani, Vice President & Sector Head at ICRA, highlighted that growth momentum is expected to remain muted in the near term due to uncertainties related to US trade tariffs and macroeconomic challenges in key markets like the US and Europe. He added that policy changes in the US and future interest rate trends will be crucial factors to watch.
The IT industry has seen some relief from reduced attrition rates and wage cost inflation, which were significant concerns in FY2023 and the early part of FY2024.
ICRA expects hiring to remain low in the near term until growth momentum improves by the end of FY2026. The agency linked this subdued hiring to increased investments in Generative AI, which are expected to enhance productivity and reduce costs.
GenAI Skill Training
Indian IT firms have been actively building their GenAI capabilities, training a considerable portion of their workforce in these skills. This focus has started to show results, with GenAI-related deals gaining momentum in recent quarters. The healthcare and BFSI sectors have emerged as early adopters of AI/GenAI technologies, continuing to invest in these solutions.
Despite ongoing revenue pressures and prolonged deal cycles, overall deal wins have remained stable. Industry players continue to maintain a healthy total contract value, ensuring revenue visibility in the near to medium term.
