India’s top software services exporters are expected to post flat-to-3% sequential revenue growth in the June quarter, mainly due to tepid market sentiment, despite a temporary pause on high reciprocal tariffs by the Trump administration and favourable bilateral pacts between US and countries such as China and US and UK.
IT clients remain “cautiously optimistic” with non-essential technology budgets under pressure, highlighted by reports of muted deal momentum, abrupt project pauses, and ramp downs, analysts said. Some however, point to sentiment recovering a tad even as a full-fledged recovery remains distant.
“We are still seeing abrupt project pauses and ramp-downs in pockets, as customers continue to be concerned about the stability and permanence of the trade deals that have been announced,” said Nitin Bhatt, technology sector leader, EY India.
Boardroom discussions on IT investments remain cautious, with spends generally directed towards self-funding and high return-on-investment (ROI) projects in areas of operational efficiency and cost optimisation, he said.
“There has been some easing of the overall caution since the revised trade agreement with China, but a great deal of uncertainty prevails as the threat of tariffs remains and the current situation remains temporary,” said Phil Fersht, CEO of HFS Research.
He said some firms are accelerating deals before they hit budget freezes, while others have already pulled back spending, and are slowing down spending decisions until the situation clears. There is an increased focus on investing in AI in areas where costs can be quickly decreased and competitiveness improved.
Revenue growth is expected to stay muted for the rest of the year at 2-3% at best while margins will be stable, HFS estimates. Revenue growth in the June quarter is seen largely flat for Tier-1 firms, as per InCred Capital.
The past quarter saw slowing growth as companies reported deal cancellations and pauses in tech spends.
In the March quarter, revenues of all three large IT firms showed negative-to-marginally positive growth sequentially. For Tata Consultancy Services, revenues were almost flat, growing 0.4% sequentially, while for Wipro, it increased 0.8%. Infosys’ revenue fell 2%.
At the time of macro churn, Infosys guided for a 0-3% growth in FY26 revenue, while Wipro guided for a 1.5-3.5% revenue drop in constant currency terms this quarter. TCS does not give any guidance.
The US recently cut tariffs against China from 145% to 30% for 90 days and inked a free trade agreement (FTA) with the UK, reflecting easing of tensions. A trade deal is also in the works with India, which recently signed an FTA with the UK.
Others point to signs of optimism.
The US-China tariff truce has improved IT sector sentiment by easing US recession fears, said Shaji Nair, research analyst at Mirae Asset Sharekhan. He said, however, that discretionary spend recovery would be gradual.
“In the near term, the UK-India FTA can possibly improve the operational aspects of recently-signed large UK deals by Indian IT services majors,” said Prashant Shukla, managing partner, Everest Group.
In the medium term, this can also support the motion of expansion outside the US, with the UK being one of the large end markets, he said. Firms remain conservative in their growth outlook, however.
“Uncertainty persists but the intensity has moderated given the optimistic news flow in recent weeks about low tariff structures,” said Abhishek Shindadkar, research analyst (IT), InCred Capital.
IT clients remain “cautiously optimistic” with non-essential technology budgets under pressure, highlighted by reports of muted deal momentum, abrupt project pauses, and ramp downs, analysts said. Some however, point to sentiment recovering a tad even as a full-fledged recovery remains distant.
“We are still seeing abrupt project pauses and ramp-downs in pockets, as customers continue to be concerned about the stability and permanence of the trade deals that have been announced,” said Nitin Bhatt, technology sector leader, EY India.
Boardroom discussions on IT investments remain cautious, with spends generally directed towards self-funding and high return-on-investment (ROI) projects in areas of operational efficiency and cost optimisation, he said.
“There has been some easing of the overall caution since the revised trade agreement with China, but a great deal of uncertainty prevails as the threat of tariffs remains and the current situation remains temporary,” said Phil Fersht, CEO of HFS Research.
He said some firms are accelerating deals before they hit budget freezes, while others have already pulled back spending, and are slowing down spending decisions until the situation clears. There is an increased focus on investing in AI in areas where costs can be quickly decreased and competitiveness improved.
Revenue growth is expected to stay muted for the rest of the year at 2-3% at best while margins will be stable, HFS estimates. Revenue growth in the June quarter is seen largely flat for Tier-1 firms, as per InCred Capital.
The past quarter saw slowing growth as companies reported deal cancellations and pauses in tech spends.
In the March quarter, revenues of all three large IT firms showed negative-to-marginally positive growth sequentially. For Tata Consultancy Services, revenues were almost flat, growing 0.4% sequentially, while for Wipro, it increased 0.8%. Infosys’ revenue fell 2%.
At the time of macro churn, Infosys guided for a 0-3% growth in FY26 revenue, while Wipro guided for a 1.5-3.5% revenue drop in constant currency terms this quarter. TCS does not give any guidance.
The US recently cut tariffs against China from 145% to 30% for 90 days and inked a free trade agreement (FTA) with the UK, reflecting easing of tensions. A trade deal is also in the works with India, which recently signed an FTA with the UK.
Others point to signs of optimism.
The US-China tariff truce has improved IT sector sentiment by easing US recession fears, said Shaji Nair, research analyst at Mirae Asset Sharekhan. He said, however, that discretionary spend recovery would be gradual.
“In the near term, the UK-India FTA can possibly improve the operational aspects of recently-signed large UK deals by Indian IT services majors,” said Prashant Shukla, managing partner, Everest Group.
In the medium term, this can also support the motion of expansion outside the US, with the UK being one of the large end markets, he said. Firms remain conservative in their growth outlook, however.
“Uncertainty persists but the intensity has moderated given the optimistic news flow in recent weeks about low tariff structures,” said Abhishek Shindadkar, research analyst (IT), InCred Capital.
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