IT majors face AI disruption amid mixed growth trends

Business Desk

MUMBAI

India’s top five IT firms — Tata Consultancy Services, Infosys, HCLTech, Wipro and Tech Mahindra — ended FY26 at a critical inflection point, navigating macroeconomic headwinds and an accelerating shift towards artificial intelligence-led services, PTI reported on Sunday.

 The sector is undergoing a structural reset as AI-driven productivity begins to compress revenues from traditional services. Analysts noted that while legacy business models are facing deflation, new AI-native deals worth billions are emerging, shifting client demand towards modular and outcome-based contracts.

 Performance across companies remained mixed. TCS and Infosys indicated improving momentum and resilience in key markets, while HCLTech and Wipro flagged continued demand volatility and weaker discretionary spending. Tech Mahindra, however, expressed confidence in AI’s long-term potential despite near-term uncertainties. 

 A report by ICICI Direct estimates AI could lead to 2–3 per cent annual revenue deflation in traditional IT services over the next few years, while creating a $300–400 billion opportunity by 2030. 

 Companies are already witnessing strong traction in AI-led offerings, with rising deal pipelines and growing contributions from advanced digital services.  Geopolitical risks, particularly in West Asia, along with global macro uncertainties, continue to influence client spending and decision-making. 

 However, industry leaders remain optimistic that stabilising economic conditions and sustained investments in AI will support long-term growth.  Overall, the Indian IT sector is transitioning rapidly, balancing short-term pressures with a transformative shift towards AI-driven innovation and future-ready business models.

Analysts also highlighted that companies are recalibrating workforce strategies, with increased focus on reskilling employees in AI and automation technologies. Hiring trends are becoming more selective, while deal cycles remain elongated. Despite near-term pressures, strong digital pipelines and enterprise AI adoption are expected to support medium-term revenue visibility across the sector.