India’s top IT companies, including Wipro, TCS, and Infosys, are expected to face another difficult year in fiscal 2026 due to ongoing weak client spending in the US. Analysts suggest that recent signals from Accenture indicate continued caution in IT budgets and delays in decision-making, which could slow down the sector’s near-term recovery.
Accenture, a key indicator for the global IT industry, highlighted in its latest quarterly update that discretionary spending remains constrained. The company also noted deal cancellations and delays, particularly in the US, as clients tighten budgets due to economic uncertainty and trade tensions. Some of these challenges have been attributed to policy changes under the Trump administration’s “Department of Government Efficiency” efforts, as mentioned by Accenture’s CEO Julie Spellman Sweet.
The uncertainty in the IT sector has intensified over the past few months, with concerns about whether a meaningful recovery will take place in the coming fiscal year. The Indian IT index has fallen over 15% this year, marking one of its worst quarterly performances since mid-2022. Major firms, including HCL Tech, TCS, Wipro, and Infosys, have all experienced stock declines ranging from 11% to 18% since January.
Growth projections for the industry remain subdued. Citi Research expects a 4% revenue increase for IT firms in FY26, mirroring the slow performance of FY25. Morgan Stanley has also warned that cautious client spending and global market volatility may further impact growth estimates. Analysts from Kotak Institutional Equities anticipate that weak large-deal flow in FY25 will likely have a negative impact on revenues in the following year.
Additionally, the early adoption of generative AI tools is creating short-term challenges as companies adjust to new delivery models. While sectors like banking and healthcare are beginning to recover, businesses across industries remain hesitant, adopting a wait-and-watch approach amid uncertain market conditions.
