India’s information technology sector is heading into a challenging September quarter as artificial intelligence-driven pricing pressure and cautious client spending weigh on the growth outlook for major IT services companies.

According to a Reuters report published on October 1, 2026, India’s leading IT companies are expected to report another relatively weak quarter, with analysts also watching closely for possible changes to full-year revenue guidance.

AI Is Changing the Traditional IT Services Model

The rapid adoption of artificial intelligence is putting pressure on the traditional business model of Indian IT services companies.

For years, much of the industry has relied on billing clients based on employee hours and project-based services. The growing use of AI tools is now allowing companies to automate parts of software development and other technology work, creating pressure on pricing and traditional revenue models.

Analysts cited by Reuters expect AI-led pricing pressure to remain an important challenge for the sector. Higher oil prices and interest rates are also contributing to a cautious business environment.

Major IT Companies Prepare for a Weak Quarter

India’s largest technology companies are entering the earnings season with subdued expectations.

Tata Consultancy Services (TCS) is scheduled to begin reporting its September-quarter results on October 8, followed by Infosys, HCLTech and Wipro later in the month.

Analysts expect the country's six largest IT companies to post sequential revenue growth of roughly 0.7% to 3.5% for the July-September quarter, which would represent their weakest quarterly performance in around three years.

Despite the challenging quarter, year-on-year revenue growth for the industry is still expected to remain around 10% in rupee terms.

Infosys Outlook Under the Spotlight

Investors are expected to pay particular attention to the annual revenue guidance provided by major IT companies.

Infosys, which previously guided for revenue growth of 1.5% to 3% for the financial year, could face pressure to adjust its outlook. Analysts have suggested that the company may reduce the upper end of its forecast as demand conditions remain uncertain.

Such changes could influence investor sentiment across the broader Indian IT sector.

IT Stocks Have Faced Pressure in 2026

The challenges facing the industry have also been reflected in the stock market.

Reuters reported that the Nifty IT index had fallen approximately 27% in 2026, significantly underperforming the broader Nifty 50 index.

Investors are increasingly evaluating whether Indian IT companies can successfully transition from traditional labour-intensive services toward AI-enabled and higher-value technology solutions.

AI Could Also Create New Opportunities

While artificial intelligence is creating pricing and employment challenges for traditional IT services, it could also provide a significant growth opportunity for Indian technology companies.

Large IT firms are investing in AI services, automation, cloud computing, cybersecurity and specialised technology capabilities. Companies that can help global businesses deploy AI at scale could potentially create new sources of revenue and improve productivity.

The key challenge will be balancing AI-driven efficiency with sustainable revenue growth.

What to Watch Next

The upcoming earnings season could provide important clues about the future direction of India's IT industry.

Investors and businesses will be watching:

• September-quarter revenue growth
• New technology deal wins
• AI-related demand
• Pricing trends
• Employee utilisation and hiring
• Margin performance
• Full-year revenue guidance
• Investments in AI and automation

The performance of TCS, Infosys, HCLTech and Wipro could provide a broader indication of how India's technology services industry is adapting to the rapid transformation driven by AI.

Conclusion

India’s IT sector is entering an important transition period. AI is creating opportunities for automation and new technology services, but it is also challenging the traditional billable-hours business model that has supported the industry for decades.

With major IT companies preparing to announce their September-quarter results, the coming weeks could reveal whether AI pressure and cautious client spending are temporary headwinds or signs of a deeper transformation in India's technology industry.

For Indian IT companies, the ability to turn AI from a source of pricing pressure into a source of new revenue could become one of the most important competitive factors in the years ahead.

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