Indian IT Sector Faces Uncertain Recovery Amid Global Challenges

India's information technology sector is facing a prolonged downturn, with analysts predicting no significant recovery in fiscal 2026 due to weak discretionary spending and heightened global uncertainties. Accenture's recent quarterly report highlighted constrained budgets and a lack of meaningful increases in client spending, which is concerning given the importance of the U.S. market for Indian IT firms. The Indian IT index has dropped 15.3% this year, with major companies like TCS, Wipro, and Infosys experiencing significant losses. Analysts have noted that the softening demand and weak deal flow may lead to lower revenue from mega deals in the upcoming fiscal year, while early stages of generative AI adoption could pose additional challenges. Despite some recovery signs in banking and healthcare, clients are adopting a cautious approach, which may further limit spending. Overall, revenue growth for IT companies is expected to stagnate at around 4%, reflecting similar trends from the previous fiscal year.