Cloud of uncertainty for Indian IT in FY26.

Subscribe to enjoy similar stories. Better growth for the Big Five of India's IT industry in the next financial year has come under doubt, with some of the largest banks, the biggest customers of homegrown IT firms, putting large tech spending projects on hold. The reason: Uncertainty over inflation rates and whether America’s recent tariffs on goods from China and Mexico could start a new round of trade war.

After meeting company executives, at least two brokerages including JM Financial Institutional Securities Ltd and Kotak Institutional Equities last week red-flagged some challenges that could dampen growth for the country’s $283 billion IT industry. Optimism also weakened after Capgemini SE guided last month that the French IT services firm will experience no organic growth in the current calendar year. Tata Consultancy Services Ltd, Infosys Ltd, HCL Technologies Ltd, Wipro Ltd, and Tech Mahindra Ltd had $78.03 billion in revenue last year, or about 30% of the country’s IT industry.

“IT Services’ 3QFY25 results were, in general, marginally better than expectations…3Q results, however, appear a distant memory now. Uncertainty has crept in the economic outlook since. Trade war seems imminent.

Recalcitrant inflation has pushed out fed rate cut hopes and plunged consumer confidence in the US. Such uncertainty is anathema to IT Services demand," JM Financial analysts Abhishek Kumar and Nandan Arekal wrote in a note dated 26 February, titled “Cloud (of the wrong variety) on the horizon?" “In our recent interactions with IT services players, we picked up sporadic instances of pause in transformation programs by large US banks. This, if spreads, could put Street’s (and ours) FY26 growth estimates at risk.