India’s July–September 2026 IT-services results are still forecasts, not reported outcomes. As of October 4, analysts expect muted growth for many large providers, with margins broadly steady or slightly lower. The central question is whether AI-driven productivity and renewal price concessions will weigh on existing revenue faster than new AI-related work and deal wins convert into recognized sales.
What analysts expect for Q2 FY27
Q2 FY27 refers to the quarter ended in September 2026. At the time of the latest reports, company results were still forthcoming. Kotak Institutional Equities’ view, as reported by Financial Express, was that demand conditions had “neither improved nor deteriorated since the June 2026 quarter.” That points to a subdued quarter rather than a clear recovery or a sudden collapse.
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Forecasts vary by company and brokerage, and they are not management guidance. NDTV Profit reported Kotak’s sequential growth expectations of about 2% organic growth for HCLTech, 1.1% for Infosys and 0.5% for TCS. For mid-tier firms, its estimates were 7% for Persistent Systems, 4.5% for Coforge and 3.5% for Mphasis. Citi separately estimated organic constant-currency services revenue growth of between minus 0.7% and 1.5% sequentially for six leading companies. These estimates use different company coverage and should not be treated as a directly comparable forecast set. NDTV Profit
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A separate October 3 report summarizing Kotak estimates said Infosys could reduce its growth-guidance range expectation to 1.5–2.5%, from 1.5–3%, and that HCLTech could provide overall growth guidance of 3–4%. These are reported brokerage expectations about possible guidance, not confirmed company guidance. FinTech BizNews
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AI can create new work and deflate existing work
AI is not simply removing demand for IT services. It creates work around AI adoption, cloud infrastructure and implementation, while tools that automate tasks can reduce the labor and time required for existing services. When contracts renew, clients may seek productivity concessions and retain more of the savings, putting pressure on pricing and revenue from some established work.
Financial Express reported Kotak’s estimate of around 7% gross deflation and 3.5% net deflation due to AI adoption. These are brokerage estimates reported second-hand, not observed sector-wide results or a universal measure of the effect on each company. Kotak’s reported assessment is that new AI-related service opportunities are growing but do not yet fully compensate for deflation in existing work. Financial Express
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Global contract data helps explain how rapid AI-related growth can coexist with pressure in traditional services. Information Services Group (ISG) reported that combined global technology-services annual contract value (ACV) rose 43% year over year to $42.4 billion in Q2 2026. Cloud-based XaaS ACV climbed 65% to $31.5 billion, while managed-services ACV rose 2.7% to $10.9 billion. ISG’s index covers commercial outsourcing contracts with ACV of at least $5 million; these are global contract-booking figures, not Indian IT companies’ quarterly revenue growth. ISG
The mix within that market matters. ISG reported global IT outsourcing ACV down 3% to $7.7 billion and said application development and maintenance faced pressure as AI reduced reliance on labor-based models. At the same time, new-scope managed-services awards grew 14% to $8.2 billion. Sourcing can also reflect work moving between providers rather than newly outsourced demand, so contract activity is not a simple measure of market expansion.
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ISG chief AI officer Steve Hall described the contrast: “The technology services industry continues to ride high, driven largely by AI-fueled demand for hyperscaler services.” He added that “traditional labor-intensive work is increasingly displaced by LLMs.” Hall also said enterprise focus is shifting from AI opportunity toward “execution, return on investment and business outcomes.” Those comments describe a changing mix of demand, not the disappearance of IT services. ISG
Deal wins matter only when they convert to revenue
Financial Express reported that Kotak expected strong total contract value (TCV) for HCL Technologies, Persistent Systems, Coforge and TCS, while Infosys, L&T Technology Services and Wipro could have more muted deal activity. A large TCV figure can signal future work, but it is not revenue earned in the September quarter. Ramp schedules, project starts and the timing of revenue recognition determine when a contract affects reported results.
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Investors assessing deal momentum should distinguish a newly created client engagement from a vendor transfer, and announced contract value from work already underway. Conversion pace is particularly important when quarterly growth is subdued: a strong booking headline may support later periods without changing the current quarter’s revenue.
Why steady margins may conceal underlying pressure
Analysts expected large-company margins to be broadly stable or marginally lower year over year. Financial Express reported that the rupee depreciated 0.8% sequentially and 8.4% year over year during the period, which could partly offset pricing pressure. The figures and their implications are period-specific forecasts and reporting, not confirmed company results. Cash-flow hedging can delay or alter the benefit that currency movement eventually has on reported profit.
The same report said Tech Mahindra, L&T Technology Services, Coforge and Hexaware could face meaningful forex losses. Company-level exposure and hedging differ, so currency movement does not translate uniformly into margins. Stable reported margins would not, by themselves, establish that pricing pressure has stopped; currency effects, utilization, wage costs and project mix can all influence the result.
What to check when results arrive
When company results and outlooks are published, compare measures on a like-for-like basis rather than treating one headline number as the whole story:
- Organic constant-currency growth: separates underlying business movement from currency effects and acquisitions where disclosed.
- Reported growth: shows what entered the accounts, including currency translation.
- TCV and conversion: pair new bookings with evidence about project starts, ramp timing and recognized revenue.
- Renewals and pricing: watch for productivity concessions, fixed-price maintenance exposure and the share of efficiency gains retained by clients.
- AI-related work: distinguish new service demand from automation that reduces effort or pricing in existing contracts.
- Margins and currency: examine wage cycles, utilization, forex sensitivity and hedging alongside the headline margin.
Analyst expectations reported the TCS result announcement for October 8 and Infosys’s for October 27, 2026. These dates can change; check each company’s investor-relations calendar for the confirmed schedule.
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