Steady Horizons: Indian IT Sector Faces Moderate Growth Amidst Global Challenges

Indian IT companies are projected to see a 4-6% revenue growth in USD terms by FY26, with attrition stabilizing. While hiring remains low due to economic uncertainties and trade tariffs, investments in Generative AI offer a silver lining as industry players navigate global market fluctuations.

Indian IT services companies are anticipating a moderate revenue growth between 4% and 6% in USD terms for the Financial Year 2026 (FY26), as per the latest projections by credit rating agency ICRA. Attrition levels are expected to stabilize around the long-term average of 12% to 13%, marking a period of relative stability for the industry.

ICRA further reports that while hiring activity might stay subdued until the growth trajectory strengthens by the end of FY2026, operating profit margins for a representative sample are likely to remain stable at 22.5% to 23% for the next few quarters. Vice President & Sector Head of ICRA, Deepak Jotwani, attributes the restrained growth to uncertainties stemming from US trade tariffs and global economic headwinds.

Despite near-term revenue pressures and elongated deal cycles, industry players have secured robust contract values, ensuring medium-term revenue visibility. Aided by increasing investments in Generative AI initiatives, Indian IT firms are adapting their skillsets and offerings to harness new technological capabilities thereby positioning themselves advantageously amidst evolving global challenges.

(With inputs from agencies.)