India’s leading IT services companies are likely to post a muted performance in the first quarter of FY27, with growth expected to remain subdued as clients continue to prioritise cost-cutting over large-scale technology spending, according to an Equirus Securities report.The brokerage said growth visibility is unlikely to improve significantly until enterprises move beyond cost optimisation projects and begin investing in larger AI-led transformation programmes.It expects demand to remain measured through FY27 as macroeconomic uncertainty and geopolitical risks keep discretionary technology spending under pressure.
Revenue growth likely to stay subdued
Equirus expects the top six large IT companies to report constant-currency organic US dollar revenue growth between a decline of 1.7% and an increase of 1.1% quarter-on-quarter for the June quarter.Wipro‘s IT Services business is expected to be at the lower end of the range, while Tech Mahindra is likely to lead growth.On a reported basis, constant-currency consolidated dollar revenue is projected to range from a 1.1% decline to 1.7% growth quarter-on-quarter. Cross-currency headwinds could reduce growth by up to 30 basis points.The report noted that although AI adoption is accelerating, most enterprises are funding these initiatives through productivity gains and vendor consolidation instead of increasing overall IT budgets, limiting near-term revenue expansion.
Margins seen holding up despite weak demand
Equirus expects earnings margins to remain resilient, supported by a nearly 3% quarter-on-quarter depreciation in the average rupee-dollar exchange rate, lower supply-side pressures, continued cost optimisation and productivity improvements.The brokerage also outlined its expectations for company guidance. It expects Infosys to revise its FY27 constant-currency revenue growth guidance to 2.8-4.3% excluding the Vertex acquisition, while retaining its EBIT margin guidance of 20-22%.For HCLTech, Equirus expects no change in its 1.5-4.5% constant-currency services growth guidance and 17.5-18.5% EBIT margin outlook. Wipro is likely to guide for a 2% decline to flat quarter-on-quarter growth in its IT Services business for the second quarter.
AI remains long-term growth driver
Despite the near-term slowdown, Equirus believes IT service providers will continue to play a crucial role in enterprise AI adoption. The brokerage expects demand for legacy modernisation, cloud migration, data engineering and cybersecurity to support long-term opportunities.It added that enterprise AI architectures are becoming increasingly complex, with organisations deploying a hybrid mix of large language models (LLMs), small language models (SLMs) and AI agents, driving demand for system integration expertise.While valuations have corrected significantly in 2026 so far, Equirus said meaningful improvement in stock multiples will likely depend on stronger growth visibility beyond the current quarter.
