Why India’s IT companies are still struggling despite the AI boom
Key Takeaways
- •India’s IT sector had a weak start to FY27 even though artificial intelligence momentum remained strong.
- •Clients delayed projects, reduced discretionary spending and cancelled deals, which pressured the industry.
- •Tech Mahindra was the best performer among the companies highlighted in the report.
- •Analysts said the sector’s earnings downgrade cycle may not be over yet.
- •Investors are watching whether delayed projects become new bookings and whether AI-led demand can offset the slowdown.
Why India’s IT companies are still struggling despite the AI boom
India’s information technology companies had a weak start to FY27 even as momentum in artificial intelligence remained strong. Clients delayed projects, reduced discretionary spending and cancelled deals, leaving the sector under pressure. For a sector that depends heavily on enterprise technology budgets and long project cycles, slower decision-making can quickly show up in earnings trends, even when demand for newer tools such as AI remains a major theme in the broader market.
Tech Mahindra stood out as the best performer in the group, but analysts said the industry’s earnings downgrade cycle may not be over. That keeps attention on whether the current weakness is limited to a few quarters or part of a longer period of restrained spending across global clients.
The report focused on Tech Mahindra, Infosys, Wipro, Tata Consultancy Services and HCL Technologies, all of which remain under close watch as the sector navigates slower client decision-making and cautious technology spending. Investors and industry watchers will be looking for signs that delayed projects convert into new bookings, as well as whether companies can offset the softness through AI-led demand or other higher-value services.
