Indian IT services sector’s revenue growth seen at 4-6% with muted hiring in FY26: ICRA

Indian IT services sector is expected to witness moderate growth in revenue generation of about 4-6% in the financial year 2025-26 (FY26). The hiring activity is also expected to remain low in the IT sector by the end of the financial year, according to a report by credit rating agency ICRA.

ICRA estimates that the attrition levels are expected to remain around 12-13% in near future due to the industry navigating the global economic uncertainties and policy changes.

Highlights of ICRA’s IT Industry Outlook 

Revenue growth: The agency projects its sample set of leading Indian IT companies, which represent 60% of the industry’s revenue, to grow at the rate of 4-6% in dollar terms in FY26.

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Low hiring: Recruitment is expected to stay muted until the growth increases in the industry, which is projected to happen in the second half of FY26.

Macroeconomic challenges: With rising uncertainty in the global markets due to US President Donald Trump’s trade tariffs, interest rate trajectory and policy changes in significant markets such as the US and Europe could pose hurdle to growth.

Generative AI boost: Investments in Generative AI (GenAI) are driving new deal inflows, particularly in the BFSI and healthcare sectors.

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Recovery Trends in Indian IT Industry 

ICRA notes in its report that its sample set of the top IT firms in the country registered a 3.6% year-on-year revenue growth during the first nine months of FY25. The increase is attributed to the increased discretionary spending in BFSI and retail sectors, in tandem with increasing investments in GenAI.

ICRA’s sample set includes companies such as TCS, Infosys, Wipro, HCL Technologies, LTIMindtree, Tech Mahindra, and Oracle Financial services, among others.

Generative AI driving growth & cost optimisation 

Major IT companies have ramped up Generative AI capabilities, and have started witnessing a an increase in AI-related deal inflows, which is expected to rise in the medium term.

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“The healthcare and BFSI sectors remain early adopters of GenAI,” said Deepak Jotwani, Vice President & Sector Head at ICRA, adding that these sectors drive continued investments in AI-based solutions and systems.

The lower hiring levels are attributed to increased AI-driven automation, which enhances productivity and helps in cost optimisation.