INDUSTRY
Recovery may elude IT companies in FY26 amid Trump tariffs, global uncertainty
- IBJ Bureau
- Mar 22, 2025
Information technology (IT) companies, among the worst-performing sectors in the country this year, may not see a recovery in FY26, analysts have said after Accenture flagged weak discretionary spending and demand in its quarterly report.
Accenture, the world’s largest IT services player and bellwether for the Indian IT industry, has warned that spending on discretionary projects in the quarter “was still constrained” and flagged no meaningful increase in client budgets.
Escalating global trade tensions following fresh US tariffs on trading partners have sparked concerns over a slowdown in the United States – a key market for Indian IT companies.
“Whatever has happened in the last two months has created a higher level of uncertainty in terms of how the first half of fiscal 2026 will pan out and what impact it will have on the FY26 recovery rate,” Amit Chandra, deputy vice-president of HDFC Securities, told the Reuters.
India’s IT index is currently down 15.3 per cent so far this year and is set for its worst quarter since June 2022. Top companies such as TCS, Wipro, Infosys and HCLTech have lost between 11.2 and 18.1 per cent this year.
Analysts of Kotak Institutional Equities have said that softening demand recovery and weak mega deal flow in FY25 will result in lower incremental revenue from mega deals in FY26 for Indian tier-I IT. “Companies will also face net headwinds from early stages of GenAI adoption,” they have said.
Citi Research has estimated that IT companies in its coverage could see revenue growth of 4 per cent in FY26, similar to that of FY25, while Morgan Stanley expects growth assumption to be hurt due to subdued client spending.
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