India’s leading IT firms, including TCS, Infosys, HCLTech, Wipro, and Tech Mahindra, concluded fiscal year 2026 at a pivotal juncture, confronted by macroeconomic challenges, geopolitical risks in West Asia, and the transformative influence of Artificial Intelligence (AI). This transition reflects a significant shift from traditional service delivery to AI-driven models, signaling a major overhaul in client expectations.
Earnings reports indicate a rapid evolution within the sector as AI-induced productivity gains lead to declining revenues from legacy services. However, this short-term downturn is being balanced by a surge in new AI-focused contracts, shifting client priorities from volume-based to modular, outcome-oriented agreements. This trend has yielded a mixed outlook for fiscal year 2027, with companies reporting diverging performance indicators. While TCS and Infosys reported optimism about diminishing macroeconomic pressures, HCLTech and Wipro raised alarms about ongoing market volatility and reduced discretionary spending.
According to an ICICI Direct report, AI is projected to contribute to an annual revenue deflation of 2-3% in traditional IT services over the next few years, even as Indian IT services eye a potential AI-led market expansion worth USD 300-400 billion by 2030. TCS, India’s largest IT services provider, noted a robust 12.22% increase in net profit for the March quarter, reaching Rs 13,718 crore, while its operational revenue grew by 9.64% to Rs 70,698 crore. In the full fiscal year, TCS recorded a 1.35% rise in profit after tax to Rs 49,210 crore, with revenue increasing by 4.58% to Rs 2.67 lakh crore.
CEO K Krithivasan highlighted TCS’s momentum entering the new fiscal year, citing strong deal signings and a belief that the bulk of recent economic headwinds have abated. He addressed concerns about the West Asia crisis, suggesting that its impact would primarily affect clients in the travel and transportation sectors and those based in the Gulf region.
Infosys also reported a strong performance, with a 20.8% increase in consolidated net profit to Rs 8,501 crore and a 13.4% rise in revenue to Rs 46,402 crore for the January-March quarter. The full year saw net profit climbing by 10.20% to Rs 29,440 crore and revenue up 9.6% to Rs 178,650 crore. CEO Salil Parekh acknowledged the cannibalizing effect of AI on traditional services but noted this was balanced by growth in new AI-driven offerings.
In contrast, HCLTech’s consolidated net profit rose by 4.2% year-on-year to Rs 4,488 crore for Q4, with revenue climbing by 12.34% to Rs 33,981 crore. However, the company faced a 4.30% decline in full-year profits, although its revenue increased by 11.18% to Rs 130,144 crore. HCLTech CEO C Vijayakumar described the business landscape as uncertain, attributing performance shortfalls to soft discretionary spending and delayed decisions. He emphasized that while traditional service segments face challenges, HCLTech’s AI revenues are gaining traction.
Wipro reported a quarterly net profit of Rs 3,501.8 crore, a marginal decline of 1.89%, even as revenues rose by 7.6% to Rs 24,236.3 crore. Management characterized the current macroeconomic environment as a “new normal,” reflecting ongoing geopolitical disruptions. They also announced a Rs 15,000 crore share repurchase program to bolster investor confidence.
Tech Mahindra registered a 16% increase in consolidated net profit to Rs 1,353.8 crore for Q4, with revenue climbing 12.6% to Rs 15,076.1 crore. Over the full fiscal year, profit grew by 13.15% to Rs 4,810.9 crore, while revenue surged by 7.2% to Rs 56,815.4 crore. Company leaders dismissed concerns about AI-induced revenue deflation, viewing it instead as a long-term opportunity for client modernization.
As the Indian IT sector adapts to these challenges and opportunities, the focus on harnessing AI presents both risks and vast potential for growth, shaping the industry’s future trajectory.
Original Source: https://www.business-standard.com/industry/news/indian-it-faces-ai-reset-top-5-firms-post-mixed-fy26-amid-macro-headwinds-126042600466_1.html
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Publish Date: 2026-04-26 19:45:00
