IT Slowdown To Continue: Analysts Say Wipro, TCS, Infosys To See Muted Growth In FY26

Accenture, a key indicator for the global IT industry, revealed in its latest quarterly report that discretionary spending remained constrained.

The Indian IT index has declined by over 15 per cent this year, moving towards what might be one of its weakest quarters since mid-2022.

Source : Freepik

India’s top IT firms, including TCS, Wipro, and Infosys, are likely to encounter another difficult period in the upcoming 2025-26 fiscal year (FY26).

A report by Reuters said that this downturn is expected for the firms as client spending remains weak in the US. Analysts suggest that Accenture’s recent outlook highlights continued caution in IT budgets, along with sluggish decision-making by clients. These challenges may hinder the sector’s near-term recovery prospects, the report noted.

Accenture, a key indicator for the global IT industry, revealed in its latest quarterly report that discretionary spending remained constrained. The company also noted ongoing deal cancellations and delays, particularly in the US market remained a major challenge. Clients have been scaling back budgets amid economic instability and trade-related concerns, it added.

Muted Growth Projections for FY26

Quoting Amit Chandra, Deputy Vice President at HDFC Securities, Reuters said, “The developments of the past few months have only intensified the uncertainty encircling the first half of FY26. It is increasingly not clear whether a recovery will take place at all this fiscal.”

Notably, this outlook has been visible in the performance of broader market indices. The Indian IT index has declined by over 15 per cent this year, moving towards what might be one of its weakest quarters since mid-2022. Major IT firms such as TCS, Wipro, Infosys, and HCL Tech have all seen their stock prices drop between 11 per cent and 18 per cent since January.

Citing Citi Research’s forecast, the report said that IT firms are expected to achieve only 4 per cent revenue growth in FY26, mirroring the subdued performance of FY25.

Morgan Stanley also pointed out that growth projections could be impacted by cautious client spending and global market volatility.

While sectors like banking and healthcare are showing early signs of recovery, clients across industries remain hesitant. “There’s a definite shift to a wait-and-watch outlook,” Chandra added.