From The Economic Times · PTI · · 1m 10s
IT Q2 Preview: Muted Growth, Steady Margins
IT firms report muted Q2 growth as AI deflation pressures margins.
In brief
IT firms report muted Q2 growth as AI deflation pressures margins. Top Indian IT companies expect 0.5-1% Q2 revenue growth with steady margins amid AI-driven cost pressures. Originally reported by The Economic Times.
Q2 growth outlook
India's top IT companies likely report muted revenue growth and steady margins for July-September quarter.
“Q2 is not going to be any better than Q1... because we are not seeing any revival in client budgets or spending”
Q2 growth forecast
UnearthInsight expects top-five it firms to grow 0.5-1 per cent quarter-on-quarter in fy27 q2.
Client spending trends
Discretionary spending remains stuck amid geopolitical tensions with long decision cycles.
Gartner's view
Gartner sees q2 as somewhat stronger than q1 due to previously awarded contracts moving into revenue.
“somewhat stronger”
AI deflation impact
AI is deflating traditional services with ai-led revenue under 5 per cent of industry total.
Earnings timeline
Tata Consultancy Services reports on october 8, HCLTech on october 12, Infosys on october 23.
Margin pressures
Wage hikes and ai investments are pressuring margins with ai efficiency gains passed to clients.
Margin outlook
Top firms expect slight margin recovery by fy28 with 6 per cent growth.
AI revenue growth
Infosys reported 8.2 per cent ai revenue in june quarter, tcs reported usd 2.6 billion ai revenue.
What it means
Top Indian IT companies expect 0.5-1% Q2 revenue growth with steady margins amid AI-driven cost pressures.
