India’s IT industry earns money by selling hours of skilled work. Now clients are using AI to get the same work done in fewer hours, and they want lower prices.
Bengaluru, October 3, 2026: India’s biggest IT companies are heading into a difficult July-September quarter, according to Reuters. Artificial intelligence is pushing prices down, and clients are still cautious about spending. Tata Consultancy Services (TCS) will report its results first, on October 8. Infosys, HCLTech and Wipro will follow later in the month.
What analysts expect
Five brokerages cited by Reuters expect the country’s six largest IT companies to grow revenue by only 0.7% to 3.5% compared with the previous quarter. That would be their weakest quarter in about three years.
Jefferies says AI-led price cuts still have further to run, and that higher oil prices and interest rates add to the pressure. Brokerages expect HCLTech and Tech Mahindra to do relatively well among the larger firms, and Wipro to lag.
The Nifty IT index has fallen about 27% in 2026 so far, compared with a 13.4% fall in the Nifty 50, according to Reuters.
Why AI is a problem for the old model
For decades, large IT contracts paid companies for the time their engineers spent on a project. AI tools can now write code and handle routine support work faster, so the same task may need fewer hours. Clients know this and ask to share the savings, so price becomes the first topic in many negotiations.
How contracts are changing
A Reuters report in August found that TCS, Infosys, Wipro, HCLTech and Cognizant are tying more of their fees to results and less to hours worked. TCS chief executive K. Krithivasan said about 80% of the contracts in the company’s finance, HR and other business services segment are now based on outcome measures, roughly double the share before generative AI became mainstream in late 2023.
Krithivasan said TCS has so far made up for AI-related price cuts with new work. He said future growth depends on how far the company can stay ahead of that pressure. Tech Mahindra’s chief executive has warned that some firms are making hasty decisions under client pressure.
What the guidance question means
Companies give a forecast for annual revenue growth, called “guidance.” Kotak expects Infosys to lower the top end of its 1.5% to 3% forecast to 2.5%. Jefferies expects a bigger cut, to a range of 0.5% to 2%. Investors will watch whether the companies change their forecasts when they report.
What it means for jobs
Nasscom estimates India’s tech industry employs about 5.95 million people, close to 6 million. This covers IT services, business process management, engineering R&D, software products and hardware. In FY26, industry revenue grew about 6.1% to an estimated $315 billion, but headcount rose only 2.3%, with around 135,000 net additions. Revenue is now growing faster than hiring.
Nasscom also says more than 2 million tech professionals were trained in AI skills in FY26.
What to watch next
- October 8: TCS results, the first read on the quarter
- Whether Infosys and others change their yearly growth forecasts
- How many new contracts are priced on outcomes instead of hours
- Hiring of freshers across the big IT firms
This article is for general information and is not investment advice.
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