According to estimates from multiple brokerages, revenue and profit for top firms are projected to rise by about 10% year-on-year in the March quarter. However, much of this increase is attributed to the depreciation of the Indian rupee, which fell around 4% against the U.S. dollar during the period, boosting earnings when foreign revenues are converted into local currency.
The sector continues to grapple with macroeconomic uncertainty, reduced discretionary spending, and growing concerns about the long-term impact of artificial intelligence on traditional outsourcing models. Analysts say these factors are prompting clients to tighten budgets and delay large-scale projects, making forward guidance for the next fiscal year a key focus for investors.
Earnings season for the industry will kick off on April 9, with results expected from major players including Wipro, Tech Mahindra, and LTIMindtree.
Despite headline growth figures, underlying performance remains weak. On a constant currency basis—which strips out exchange-rate benefits—revenue growth for the largest firms is expected to be significantly lower, highlighting the softness in real demand. The $315 billion industry, which employs nearly 5.9 million people, has struggled to regain the double-digit growth last seen in early 2023.
Forecasts for the upcoming fiscal year also reflect caution. Infosys is expected to project revenue growth of 2% to 4%, while HCLTech may guide for 4% to 6% expansion, signaling a modest outlook amid ongoing uncertainty.
Sector performance is likely to remain uneven. Banking and financial services are expected to show relative resilience, while industries such as retail, healthcare, and technology may face pressure due to their higher exposure to discretionary spending cuts.
Investor sentiment toward the sector has weakened in recent months. Shares of major IT firms have declined roughly 20% this year, underperforming the broader Nifty 50, which is down about 13%. Concerns have been amplified by the rapid advancement of AI technologies from companies like Anthropic and Palantir, which analysts fear could disrupt traditional IT services and reduce demand for outsourcing.
Still, some analysts believe even modest growth forecasts could stabilize valuations, as current market pricing already reflects expectations of low single-digit expansion. The coming earnings season is therefore expected to play a crucial role in shaping investor confidence in the sector’s ability to adapt and remain competitive in an AI-driven landscape.