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India IT Sector Braces for Muted Earnings Amidst Global Slowdown
8 Jan
Summary
- Indian IT firms anticipate weak earnings due to U.S. demand and client holidays.
- Projected 4% revenue growth for top firms, down from 6.5% in prior quarter.
- Foreign investors exited IT stocks significantly due to economic uncertainties.
India's prominent information technology firms are anticipated to deliver subdued financial results for the December quarter, according to industry analysts. This period is expected to see a year-on-year revenue growth of approximately 4% for the top six companies, a notable decrease from the 6.5% recorded in the September quarter. The downturn is largely influenced by persistent weak demand from the United States and the customary holiday-related pauses in client projects.
The broader Indian IT industry, valued at $283 billion, continues to navigate macroeconomic headwinds. These include uncertainties surrounding U.S. tariffs and the impact of proposed visa fee increases, which collectively dampen client spending. Foreign portfolio investors have reacted by divesting $8.5 billion from IT stocks in 2025, reflecting a cautious outlook amidst global economic concerns.
Despite the current challenges, a shift towards artificial intelligence is creating optimism for future growth. Companies are actively shaping AI strategies through various initiatives, with expectations that AI momentum will accelerate in the coming six months, potentially boosting demand into 2026. Key players like Tata Consultancy Services will commence the earnings season on January 12.
