# Indian IT Q2 Earnings Dilemma Deepens

> AI pressures weaken Indian IT growth as pricing power falls.
- Title: Indian IT Q2 Earnings Dilemma Deepens · The Economic Times
- Summary: AI pressures weaken Indian IT growth as pricing power falls. Indian IT companies face weaker organic growth and falling pricing power amid AI-driven…
- Keywords: indian it, q2 earnings, ai impact, pricing power, revenue growth, it sector, large caps, mid caps, organic growth, acquisitions, money, business
- Source: The Economic Times — https://economictimes.indiatimes.com/markets/stocks/earnings/indian-its-q2-earnings-dilemma-deepens-more-deals-but-weaker-growth-and-falling-pricing-power/articleshow/134685622.cms
- Author: Nikhil Agarwal
- Published: 2026-10-05T04:15:00+00:00
- Read time: 1 min
- Topics: indian it, q2 earnings, ai impact, pricing power, revenue growth, it sector, large caps, mid caps, organic growth, acquisitions, money, business
## Q2 earnings season begins
India’s IT sector enters Q2 earnings season this week facing a contradiction.
## Deal activity remains strong
Deal activity remains healthy but revenue growth is weakening as clients demand larger shares of ai productivity gains.
## Nifty IT index drops 39%
The nifty it index has nosedived about 39% from its record high of 46,088.90 reached in december 2024.
## Jefferies forecasts weak growth
Jefferies expects large it companies to deliver weakest q2 growth in three years with organic growth at 0.8% and aggregate at 1.7%.
## Kotak warns of pricing deflation
Kotak says ai-adjusted pricing pool is shrinking as clients embed productivity concessions into contract renewals.
## AI causes gross deflation
Kotak expects gross deflation of 7% and net deflation of 3.5% as clients push for efficiency gains and lower pricing.
## Acquisitions mask weak growth
Hcl tech, infosys, coforge and cyient expected to benefit from recent acquisitions or large deal ramp-ups.
## Mid-caps show growth premium
Mid-tier companies trade at 75% premium to large-caps but expect better near-term earnings visibility.
## Infosys guidance under pressure
Emkay expects infosys to lower fy27 revenue growth guidance to 1.5%-2.5% from 1.5%-3%.
## Wipro faces weak q3 guidance
Wipro expected to provide weak third-quarter guidance with sequential growth ranging from decline of 2% to flat.
## Margin improvements fragile
Tcs margins expected to improve by 100 basis points sequentially while hcl tech margins improve by 120 basis points.
## AI threatens pricing power
The immediate challenge for indian it companies is converting deals into profitable organic growth before ai-driven productivity erodes pricing power.
## Key takeaway

Indian IT companies face weaker organic growth and falling pricing power amid AI-driven deflation, with large caps expected to grow 0.5% while mid-caps surge to 12%.