As the Indian IT sector gears up for the Q4 earnings season, all eyes are on how Trump’s tariff policies and the changing global macroeconomic landscape will impact growth, deal pipelines, and future guidance. With over 60% of India’s IT revenue dependent on North America, this quarter’s commentary is set to provide crucial insights into what FY26 might hold for the industry.
Revenue Growth Under Pressure
The January–March quarter is expected to be muted for most top-tier IT companies like Infosys, TCS, Wipro, and Tech Mahindra. A combination of seasonal weakness, fewer billing days, and account-specific issues is likely to result in a sequential revenue decline. Analysts expect that companies like LTIMindtree may be more severely impacted due to large clients, such as Citigroup, cutting back on external IT contractors.
“The deterioration in the macro environment will weigh on Q4 numbers and FY26 guidance,” analysts noted, predicting modest growth figures ranging between 1–5% for Infosys and HCLTech. Meanwhile, mid-tier firms like Persistent, Coforge, and Mphasis are expected to report relatively strong growth, as they benefit from smaller, nimble operations and niche capabilities.
Trump Tariffs Stir Uncertainty
The biggest disruption has been the Trump administration’s aggressive tariff policies, which have stoked fears of a consumption slowdown and tech budget cuts in the U.S. This, in turn, could negatively affect Indian IT firms that rely heavily on exporting tech services to American clients.
Adding to the woes, H-1B visa uncertainties and pushback on offshoring initiatives have rattled Indian IT players. While most major companies claim reduced dependency on H-1B visas, Trump’s focus on local hiring has made workforce planning more complex.
“The very foundation of the IT services industry is being shaken,” noted analysts at HFS Research, echoing widespread concern over the long-term sustainability of current business models.
Deal Pipelines Offer a Silver Lining
Despite macro headwinds, deal momentum remains steady, driven largely by cost-saving contracts. Although mega-deal signings may slow, brokerages expect stable to improving annual contract values (ACV). Discretionary spending—especially in sectors like BFSI—is expected to make a cautious return.
The industry appears to be moving past delays and project ramp-downs seen through FY24, suggesting that FY26 could see a gradual pickup, especially if macro conditions stabilize.
FY26 Guidance Likely to Be Conservative
Expect cautious commentary on FY26, as Indian IT majors navigate a clouded global outlook. Infosys and HCLTech are expected to issue modest revenue growth guidance, while Wipro may even report flat or slightly negative sequential growth for Q1FY26. Margin guidance is expected to remain stable, but most firms are likely to lean on the conservative side given the uncertainty.
Generative AI to Lead the Next Growth Phase
With traditional growth levers under pressure, Generative AI (Gen AI) is emerging as a new focal point. From enhancing software productivity to transforming customer service, AI is rapidly becoming integral to the IT playbook.
Accenture’s success in booking $1.4 billion in Gen AI deals has put pressure on Indian IT firms to keep up. Experts believe that Gen AI will reshape pricing models, boost revenue per employee, and play a major role in driving future operational efficiency.
While the current benefits may be concentrated among top clients, AI adoption is accelerating across the board, making it a key theme to watch as companies prepare to deliver their Q4 results.
Conclusion:
As the earnings season kicks off with TCS announcing results on April 10, the Indian IT industry stands at a critical juncture. How companies navigate Trump’s tariff impact, AI integration, and client spending cuts will define their path ahead. For now, investors and analysts are watching closely to gauge whether FY26 will offer recovery—or more caution.
