India’s leading information technology (IT) services companies are expected to report another subdued quarterly performance as cautious client spending in the United States continues to weigh on growth. Persistent macroeconomic uncertainty, delayed decision-making by enterprises, and slower discretionary tech investments have combined to keep revenue momentum under pressure.

US Clients Continue to Cut Back on Discretionary Spending

The US remains the largest revenue contributor for India’s IT sector, but demand from American clients has yet to show a meaningful recovery. Enterprises across banking, financial services, retail, and manufacturing are prioritising cost optimisation over large-scale digital transformation projects. As a result, new deal signings are taking longer to close, while existing contracts are being renegotiated with tighter budgets.

Revenue Growth Likely to Remain Muted

Top IT exporters are widely expected to post low single-digit year-on-year revenue growth, with some companies potentially reporting flat or sequentially weaker numbers. Currency stability has offered limited relief, as volume growth remains under strain. Analysts note that growth is increasingly being driven by smaller, efficiency-focused deals rather than high-value transformation contracts.

Margin Pressures Ease, but Risks Remain

Operating margins may see modest stability this quarter due to cost-control measures, reduced attrition, and slower hiring. However, pricing pressure from clients and higher investments in artificial intelligence (AI) and automation tools could cap margin expansion. Firms are also spending more on reskilling employees to align with evolving client needs.

Hiring and Headcount Trends Stay Conservative

Hiring activity across the sector continues to remain cautious. Most large IT firms are focusing on internal talent deployment and upskilling instead of aggressive lateral hiring. Fresh recruitment is largely restricted to niche skills such as AI, cloud engineering, cybersecurity, and data analytics.

Deal Pipeline Shows Early but Uneven Signs of Recovery

While management commentary may highlight a stable or improving deal pipeline, industry watchers believe a broad-based recovery is still some quarters away. Sectors like healthcare, energy, and public services are showing relatively better traction, but overall client sentiment remains guarded.

Outlook Hinges on Global Economic Clarity

The near-term outlook for Indian IT firms will depend heavily on US interest rate movements, enterprise tech budgets, and clarity around global economic growth. While AI-led demand offers long-term opportunities, companies may continue to face uneven growth until client confidence improves.