India’s Information Technology (IT) sector is expected to post flat revenue growth of just 0 to 2 per cent in FY26, amid global economic uncertainties and sustained cost pressures impacting client spending, according to a recent report by CareEdge Ratings.
The report noted that macroeconomic headwinds have led to clients delaying or deferring discretionary tech projects, dampening overall industry momentum. However, a healthy deal pipeline offers some hope, with potential conversion in upcoming quarters providing limited revenue visibility.
CareEdge observed that despite the tepid demand, Indian IT companies are continuing to invest in transformative technologies such as cloud computing, data analytics, generative AI, machine learning, cybersecurity, ESG-driven solutions, and engineering R&D to remain competitive in an evolving digital landscape.
The IT/ITES sector continues to be a cornerstone of India’s economy and a major driver of foreign investment. Long-term prospects remain positive, buoyed by increasing global digital adoption and demand for emerging technologies like 5G, robotics, blockchain, and advanced analytics.
However, the report flagged persistent uncertainty in the US—the Indian IT industry’s largest market—as a major concern. Potential shifts in US trade policy, tariffs, or market volatility could significantly impact revenue streams for Indian IT firms.
In conclusion, while FY26 is expected to bring minimal top-line growth for the sector, the industry’s strategic pivot towards high-value, tech-driven services is expected to strengthen its resilience and global positioning over the longer term.
