India’s $283 billion information technology services industry is showing early signs of revival in 2026, as client spending begins to improve after a prolonged slowdown. Increased discretionary technology investments and a surge in artificial intelligence (AI)-led deals are helping the sector shake off demand-related concerns.
Leading IT firms such as Infosys and HCLTech have revised their revenue outlook upward, supported by strong deal wins and growing confidence among global clients. Industry executives say customers, particularly in the US and Europe, are gradually opening up their technology budgets after months of cautious spending.
Discretionary Tech Budgets Make a Comeback
After a challenging period marked by delayed projects and cost-cutting, enterprises are once again investing in digital transformation, cloud modernisation, and AI-driven solutions. Analysts note that while spending remains selective, decision-making cycles have shortened, indicating improving confidence in global economic conditions.
AI-focused contracts, including generative AI, automation, and data engineering, have emerged as key growth drivers. These deals are not only larger in value but also strategically important, helping IT companies move up the value chain.
Big IT Firms Turn Optimistic
Infosys and HCLTech have both raised their revenue guidance, citing a strong order pipeline and robust deal momentum. Other major players are also reporting stable attrition rates and better utilisation levels, suggesting operational improvements across the sector.
Industry leaders caution that while recovery is visible, growth is likely to be gradual rather than sharp, with clients continuing to prioritise projects that offer clear cost savings or productivity gains.
2026 Outlook: Cautious but Positive
Experts believe the Indian IT sector is entering a phase of measured recovery in 2026. With AI adoption accelerating and enterprises resuming technology investments, the industry is expected to see steady improvement in revenues and margins over the coming quarters.
However, macroeconomic uncertainty, geopolitical risks, and global interest rate movements remain key factors to watch.
