Indian IT sector AI impact and growth outlook

The outlook for the Indian information technology sector has fluctuated regarding the impact of artificial intelligence on growth and pricing.

Initial analysis suggested that AI-related concerns, specifically regarding pricing and earnings pressure, were diminishing. Reports indicated that as AI projects accelerate delivery and cut costs, firms like Cognizant were shifting from cost-reduction toward revenue generation. Analysts projected modest organic growth for major players such as Tata Consultancy Services, Infosys, HCL Technologies, and Wipro for the 2026-27 fiscal year.

However, subsequent assessments from the brokerage CLSA presented a more cautious view. The firm downgraded several industry heavyweights, including TCS, Infosys, and Tech Mahindra, citing fears that AI could exert “deflationary pressure” on traditional managed services and legacy businesses. CLSA suggested that USD revenue growth might be limited to low-to-mid single digits until approximately 2030, noting that the full benefits of AI integration may take time to materialize.