India's IT services sector is likely to post a "soft" June quarter as enterprises stay cautious about discretionary technology spending amid global macroeconomic uncertainty, geopolitical developments and a focus on AI-led efficiency, according to Equirus Securities.
Equirus expects the top six Indian IT services companies to report constant-currency organic US-dollar revenue performance ranging from a 1.7 % decline to 1.1 % growth quarter-on-quarter.
Wipro IT Services is expected to be at the lower end of the range, while Tech Mahindra is likely to lead the large-cap pack. Among mid-sized companies, Persistent Systems, Mphasis and eClerx are expected to post relatively stronger organic growth, it said.
1 June 2026
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"Enterprise technology spending is expected to remain measured during the June quarter as global macroeconomic uncertainty, geopolitical developments and a continued focus on AI-led productivity gains keep discretionary IT investments under pressure," as per Equirus Securities report.
The brokerage expects the first quarter of FY27 to be another soft quarter for India's IT services sector, with enterprises continuing to defer discretionary technology spending until AI deployments begin delivering measurable business outcomes and return on investment (ROI).
That said, while discretionary spending remains weak, enterprises continue to prioritise AI-led transformation programmes focused on cost optimisation, outsourcing and vendor consolidation rather than expanding overall IT budgets, the report said.
Equirus noted that IT services companies will remain central to enterprise AI adoption by enabling legacy application modernisation, data engineering, selective cloud adoption and the implementation of cybersecurity guardrails.
The brokerage added that enterprise AI environments are becoming increasingly complex, with organisations deploying a mix of large language models (LLMs), small language models (SLMs), frontier and open-source models, multiple AI agents and enterprise data platforms, increasing the need for system integrators to orchestrate and govern AI deployments.
While demand commentary is expected to be measured in the near term, management commentary on AI-led transformation deals, large deal pipelines and technology spending trends beyond the June quarter, will be closely watched.
The report expects foreign exchange 'tailwinds', with the average rupee depreciating by around 3 % against the US dollar during the quarter, along with benign supply-side conditions and ongoing productivity improvements, to support margins across most large IT companies, despite the muted revenue growth.
Equirus sees sector valuations likely remaining "measured" despite the recent correction and relatively attractive free cash flow yields, unless growth visibility improves consistently beyond the June quarter.
Among company-specific expectations, the brokerage expects Infosys to guide for 2.8 % to 4.3 % constant currency US dollar revenue growth for FY27, excluding the pending Vertex acquisition. HCLTech is expected to maintain its existing revenue growth and EBIT margin guidance, while Wipro is likely to guide for a 2 % decline to flat sequential growth in constant currency IT Services revenue for the September quarter, the brokerage note said.
Experts believe that Indian IT sector faces a weak start to FY27 due to global disruptions, delayed deal closures, and softer demand, especially in managed services.
Accenture, last month, narrowed its full-year 2026 revenue growth guidance to 3-4 % from the earlier 3-5 %, triggering a sharp decline in its share price and sending fresh jitters across an already-nervous global IT services industry that is confronting macro uncertainties and bracing for AI impact on legacy business models.
Recently, KPIT Technologies said it expects the financial performance for Q1 FY27 to be lower-than-expected previously, owing to a sudden drop in revenues over the last few weeks. It warned of an expected decline of about 1 % in USD-reported revenues for Q1 FY27 as compared to Q1 FY26, primarily due to sudden actions by some European original equipment manufacturers triggered by their recent profit warnings and adverse business outlook.
A Motilal Oswal Financial Services report had said that the macro environment, AI and geopolitical overhangs are likely to weigh on discretionary spends, decision cycles, and demand commentary for exports-led IT services firms leading to a soft Q1 FY27 showing. It expects some companies to walk back top end of guidance bands this quarter.
The note by Motilal Oswal had highlighted that Accenture's recent commentary underlines slower decision-making and cautious discretionary spends, lending support to expectation that demand recovery is likely to remain in a flux.
Last month, as Accenture reported quarterly revenue growth below consensus estimates with bookings weaker than anticipated, PL Capital (Prabhudas Lilladher) in a report on IT had said: "For Indian IT services companies, the read-through is incrementally negative as the results suggest a softer start to FY27, with limited direct revenue exposure to the Middle East but potential indirect impact through delayed deal closures, slower project ramp-ups and prolonged client decision cycles." "Further, Accenture's increased focus on the midmarket segment could intensify competitive pressures for mid-cap Indian IT companies, while weaker managed services bookings and the guidance cut suggest that discretionary spending weakness and delayed decision making, pointing to a weaker H1 for Indian IT peers," PL Capital had said.
