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Analysts expect muted growth for many Indian IT-services companies in the July–September 2026 quarter (Q2 FY27), with margins broadly steady or slightly lower. These are forecasts, not reported results: as of October 4, company earnings were still forthcoming. Investors’ key questions are whether AI-led productivity savings will pressure existing service revenues and whether large deal wins convert into recognized revenue.
What the Q2 FY27 outlook says—and what it does not
Kotak Institutional Equities’ view, as reported by Financial Express on September 30, is that demand conditions had “neither improved nor deteriorated since the June 2026 quarter.” That points to a broadly unchanged, muted demand environment for large providers, rather than a clear recovery or a sudden sector-wide collapse.
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The forecasts are not company results or management guidance. Financial Express reported that TCS was expected to announce results on October 8 and Infosys on October 27; check each company’s calendar because announcement dates can change. Final quarterly growth, margins and management outlook remained unknown as of October 4.
How much growth do analysts expect?
Analysts’ estimates vary by company and measurement. NDTV Profit’s September 29 report attributed the following sequential growth estimates to Kotak. They are forecasts, not actuals or company guidance.
#1 Best Overall
| Company | Kotak sequential growth estimate |
|---|---|
| HCLTech | Around 2% organic growth |
| Infosys | 1.1% |
| TCS | 0.5% |
| Persistent Systems | 7% |
| Coforge | 4.5% |
| Mphasis | 3.5% |
These figures were reported by NDTV Profit. Citi separately estimated sequential organic constant-currency services revenue growth between minus 0.7% and 1.5% for six leading companies, a range that illustrates differing company-level expectations rather than a single sector forecast.
A separate October 3 secondary report of a Kotak note said Infosys could lower its growth guidance expectation to 1.5–2.5% from 1.5–3%, and put expected HCLTech overall growth guidance at 3–4%. These were analyst projections reproduced by FinTech BizNews, not confirmed management guidance.
Rank #2
Why AI may lift new work and deflate existing revenue
AI has a two-sided effect on IT services. Enterprises are buying AI-related services, cloud capacity and implementation work, but automation can also reduce the labor and effort needed to deliver some existing services. At renewals, clients may seek productivity concessions and retain more of the savings, putting pressure on price realization even when the work continues.
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Rank #3
ISG’s global market data offers context, but uses a different measure from quarterly revenue at Indian listed companies. Its index covers commercial outsourcing contracts with annual contract value of at least $5 million. In its July 9, 2026 release, ISG reported:
| Global contract measure, Q2 2026 | Year-over-year change | Reported value |
|---|---|---|
| Combined technology-services market ACV | Up 43% | $42.4 billion |
| Cloud-based XaaS ACV | Up 65% | $31.5 billion |
| Managed-services ACV | Up 2.7% | $10.9 billion |
| IT outsourcing ACV | Down 3% | $7.7 billion |
| New-scope managed-services awards | Up 14% | $8.2 billion |
These are global contract-booking figures, not Indian vendor revenue growth. ISG said application development and maintenance were under pressure as AI-led work reduced labor-based models, while new-scope managed-services awards rose. It also cautioned that sourcing activity can reflect work moving between providers, not necessarily new outsourcing demand. That helps explain how strong cloud demand can coexist with pressure on traditional labor-intensive services.
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ISG’s Steve Hall described the change this way: “Managed services, meanwhile, continues to show resilience, but the nature of the demand is changing, as traditional labor-intensive work is increasingly displaced by LLMs.” He also said enterprise attention is shifting toward execution, return on investment and business outcomes. These observations describe a changing service mix, not the disappearance of IT-services demand.
Why deal wins do not immediately become quarterly revenue
Financial Express reported Kotak expected strong total contract value (TCV) for HCLTech, Persistent Systems, Coforge and TCS, while deal activity could be more muted at Infosys, L&T Technology Services and Wipro. TCV represents the value of contracts over their terms; it is not revenue recognized in the quarter in which a deal is announced.
To judge whether bookings can support later growth, look beyond the headline TCV number:
- Conversion and ramp timing: when contracted work begins, and how quickly it reaches delivery scale.
- New work versus transfers: whether a win adds outsourcing demand or shifts an existing contract from another provider.
- Contract economics: exposure to renewals, fixed-price maintenance, productivity commitments and client demands for savings.
- Revenue mix: whether AI-related services add work quickly enough to offset lower effort or pricing in established services.
Large deal wins can be a useful forward indicator, but they cannot by themselves establish that the current quarter’s revenue will accelerate.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Why steady margins can hide pressure
Kotak’s outlook, as reported by Financial Express, put large-company margins at broadly stable or marginally lower year over year. The same report cited rupee depreciation of 0.8% sequentially and 8.4% year over year for the quarter, which could partly offset pricing pressure for companies earning substantial revenue in foreign currencies. Those currency figures and margin expectations were reported forecasts and period comparisons, not confirmed company results.
The currency benefit may not flow straight through to profit. Cash-flow hedges can delay or alter the effect, and company-specific foreign-exchange positions differ. Financial Express reported that Tech Mahindra, L&T Technology Services, Coforge and Hexaware might see meaningful forex losses. Accordingly, a stable reported margin would not prove that pricing pressure had stopped; currency movements, hedging, utilization, wages and delivery mix can also affect the outcome.
Quick Recap
What to watch when results arrive
- Organic constant-currency growth: compare underlying services growth with reported growth, which can also reflect currency and other effects.
- Deal conversion: look for evidence that announced contracts are ramping into billable work, rather than relying on TCV alone.
- Renewal pricing and productivity: listen for whether clients are retaining more AI-enabled savings and how providers are responding.
- AI revenue and delivery mix: distinguish new AI-related services from automation that reduces effort in existing work.
- Margins and currency: assess pricing alongside utilization, wage cycles, forex exposure and hedge effects.
- Guidance: separate company-issued outlook from brokerage expectations reported ahead of earnings.
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