India’s top information technology services companies are heading into the March quarter earnings season with subdued expectations, as analysts flag one of the weakest demand environments seen in nearly a decade. According to a recent earnings preview by JPMorgan</a>, forward-looking commentary particularly FY27 guidance—will be closely scrutinised, marking a shift from the traditional focus on near-term quarterly performance.

The current backdrop reflects a combination of structural and cyclical pressures. Over the past year, global clients have tightened discretionary spending, delayed large deal decisions, and prioritised cost optimisation over transformation-led technology investments. This has significantly impacted revenue growth across large IT service providers, bringing sector-wide growth rates down to levels not seen since the cloud transition slowdown between 2015 and 2018.

What is notably different this time is the sharp deterioration in visibility. JPMorgan notes that this is the first time in nearly eight years that revenue guidance will take centre stage, underscoring the uncertainty around future demand. Investors are now less focused on quarterly earnings beats and more concerned about management commentary on deal pipelines, pricing stability, and client spending behaviour over the next 12–24 months.

For FY27, early guidance expectations suggest a modest recovery at best. Infosys is expected to project revenue growth in the range of 2–5 percent, while HCLTech may guide for 3–6 percent growth. Wipro, however, is likely to remain under pressure, with expectations of flat to a 2 percent sequential decline in the near term. These projections highlight a broad-based slowdown, particularly in large-cap firms that have significant exposure to global enterprise technology spending.

The March quarter itself is expected to deliver a mixed performance. While some companies may report “healthy” results relative to the immediate past quarters, they are still likely to fall short of earlier expectations. In constant currency terms, sequential growth remains weak across the board. TCS is expected to report marginal growth of 0.6 percent, while Infosys, HCLTech, and Wipro may post sequential declines of 0.7 percent, 1.6 percent, and 1.3 percent respectively. On a trailing twelve-month basis, sector growth is estimated at just 1.5 percent, reflecting a sharp deceleration in demand.

This slowdown has prompted a reset in broader sector expectations. Growth forecasts for large-cap IT firms have been revised down to around 3 percent from earlier estimates of 4 percent, while mid-cap companies are now expected to grow at about 5 percent, down from 6 percent previously. The downgrade cycle has also translated into valuation compression, with target price-to-earnings multiples across the sector reportedly cut by around 25 percent.

Despite these challenges, currency movements are providing some relief. The depreciation of the Indian rupee against the US dollar down 3.19 percent since late February offers a natural hedge for export-oriented IT companies. This currency tailwind is expected to partially offset the impact of weaker revenue growth and pricing pressures, particularly for firms with a high proportion of dollar-denominated revenues.

However, the underlying sentiment remains cautious. The Street is entering the earnings season with what analysts describe as “widespread pessimism.” The key variable now is not whether companies can deliver marginal quarterly improvements, but whether management commentary can convincingly signal a stabilisation in demand trends.

From a market perspective, the outcome of this earnings season could have broader implications for Indian equities. The IT sector has historically been a bellwether for global demand conditions and a major contributor to index performance. Continued weakness in guidance could weigh on benchmark indices, particularly given the sector’s significant weight in large-cap indices.

At a sectoral level, the slowdown also raises questions about the evolving role of artificial intelligence. While AI presents long-term growth opportunities, it is currently contributing to near-term uncertainty, as clients reassess technology budgets and vendors adapt to new delivery models.