AI Boom Heralds Sharp Recovery for Indian IT Sector by 2026

After years of subdued growth, the Indian IT industry anticipates a robust recovery by 2026, fueled by a surge in AI services demand. Thematic report by HDFC Securities notes AI now dominates 74% of IT contracts, with firms like TCS, Infosys, and Wipro focusing on AI-led engagements.

The Indian IT services industry, after enduring three years of sluggish growth, is on the brink of a significant revival expected to kick off in 2026, primarily driven by a burgeoning demand for artificial intelligence (AI) services. This forecast is highlighted in a recent sector-themed report by HDFC Securities Institutional Equities.

According to the report, IT companies have shifted focus from traditional digital transformation projects to AI-centric ventures, with AI-related deals encompassing nearly 74% of all contracts secured in the past six quarters. Major firms like TCS, Infosys, HCLTech, Wipro, LTIMindtree, and Tech Mahindra are reporting that their recent contract triumphs revolve around generative AI, agentic AI, machine learning, and AI-steered automation.

HDFC Securities projects a resurgence in growth to 7.7% in FY27, against the backdrop of a modest average growth rate of around 3% over the previous three years. Global enterprise trends indicate a stable demand climate, with businesses prioritizing AI-enhanced capabilities to facilitate cost reduction, automation improvements, and innovation acceleration.

(With inputs from agencies.)