Indian IT Sector Rebounds in H2 2025 Powered by AI and Discretionary Spending

According to a recent report by Centrum Research, India's information technology (IT) sector is anticipated to experience an improved second half of the 2025 fiscal year (H2FY26). This recovery is expected to be supported by AI-led projects, better client engagement, and an uptick in discretionary spending.

The report highlights that improved conversion and deal ramps are likely to drive growth in H2FY26. Business momentum is expected to improve progressively through the second half of the fiscal year, driven by the ramp-up of large client engagements and rising demand for AI-first services.

Among the key sectors, the banking, financial services, and insurance (BFSI) industry is expected to lead the recovery, supported by a strong deal pipeline and scalable modernization programs. However, the retail and automotive segments are likely to remain under pressure due to external policy factors and weak discretionary spending. On the other hand, the technology and healthcare verticals have shown selective strength, supported by digital programs and infrastructure upgrades.

The report notes that the overall appetite of clients for transformation remains strong, with investments in cloud, data, and AI driving medium-term demand recovery and ensuring sustainable growth in IT services. The Q2FY26 performance of IT companies reflected a stable but cautious business environment, with modest sequential growth and a selective recovery in key verticals.