Indian IT Firms Face Weak Q4 Growth as War, AI Concerns Weigh on Spending; Rupee Fall Supports Profits

Bengaluru, April 6 — India’s leading IT services companies are expected to report another subdued quarter, with revenue and profit growth driven largely by currency benefits rather than strong business demand, according to brokerage estimates.

Companies such as Tata Consultancy Services, Infosys, and HCLTech are scheduled to announce their fourth-quarter results starting April 9. Analysts expect revenue and net profit for the top IT firms to grow by around 10% year-on-year, mainly due to the depreciation of the Indian rupee against the U.S. dollar.

The rupee fell about 4% during the March quarter and touched record low levels, which typically benefits Indian IT companies because they earn most of their revenue in dollars while their expenses are largely in rupees. This currency effect increases profits when foreign earnings are converted into rupees.

However, the overall business environment remains challenging. Ongoing global conflicts, weak discretionary spending, and uncertainty around artificial intelligence are causing clients to reduce or delay technology spending. Analysts say deal wins may remain limited, and growth outside the banking and financial services sector could remain uneven.

India’s $315-billion IT sector, which employs nearly 5.9 million people, last recorded strong double-digit revenue growth in early 2023. Since then, demand has slowed as companies worldwide cut discretionary technology budgets, lengthened decision-making cycles, and shifted spending toward cost-optimization and AI-focused projects.

Brokerages expect Infosys to forecast annual revenue growth of around 2%–4% for the next fiscal year, while HCLTech may project growth of 4%–6%. On a constant currency basis, which removes the impact of exchange rate changes, revenue growth for major IT firms is expected to remain modest.

Analysts say banking and financial services may remain relatively stable, but sectors such as retail, healthcare, and high-tech could see weaker demand due to their higher dependence on discretionary spending.

Despite the slow growth outlook, market analysts believe that even modest revenue guidance could support IT stock prices, as current valuations already reflect low growth expectations. However, the long-term impact of artificial intelligence remains uncertain, and investors are waiting for clear evidence that IT companies can adapt and grow in an AI-driven technology environment.