Chennai: Revenues in India’s IT sector grew by 3% in the FY25 period, up from 1.2% in the FY24 period. The industry is expected to grow 3% to 5% in fiscal 26, which is increasing in digitalization and demand for emerging technologies.
Although trade uncertainty is a major issue for the IT industry, the IT-Software industry has been reinstalling itself to cater to the evolving demands of emerging technologies to become more effective in a dynamic business environment.
The IT industry saw revenue increase by 3% compared to FY24, while revenue increased by 3% in FY24, while revenue increased by 1.2% in FY24, up 0.7% from FY21. However, during the pandemic in FY22, revenues rose 17.2% and 14.1% in FY23.
Amid inflation, tariffs and economic uncertainty, weakness in major Western markets is mainly due to moderate growth of 3%. However, the deals won in recent quarters provide revenue visibility for H1FY26. The situation in H2FY25 has improved after the trading momentum of H1FY25 slowed down.
In the first and second quarters of fiscal 25, the industry’s top five companies won $16.1 billion and $15.3 billion worth of deals. By the third quarter, it rose to $16.5 billion in the fourth quarter, reaching another $20.3 billion.
“At present, IT companies are trying to build investor confidence with advances in AI, which will be a new technology area in the IT industry in India. Customers’ digital plans continue to provide growth opportunities for IT service participants. Generated AI, IoT machine learning and cloud conversion are the fastest growth,” CareEdge said.
In addition, the recovery in the financial services sector, coupled with the focus on cost reduction, has led to an increase in H2FY25 transactions, which is expected to support revenue in FY26.
Among the top players, TCS’s CC revenue increased by 4.2% in fiscal 25. Infosys also witnessed a 4.2% revenue growth, with HCL technology growing by 4.7% in the last fiscal year. WIPRO alone reported a 2.3% decline in revenue in fiscal 25. Wipro CC revenue growth fell 4.4% in fiscal 24.
“While recent challenges remain, we expect the Indian IT sector to maintain its growth momentum, while constant currency revenue increased by 3-5% in FY26, driven by economic recovery and resilient demand in key geographical locations,” CareEdge said.
TCS hopes that overall, fiscal 26 will be better than fiscal 25.
At the same time, due to the increase in employee compensation, the increase in costs of third-party projects, and the increase in investment in AI technology research and development, the margin weakness of IT companies remains the focus of IT companies.
Although the profit margin at 25.4% is below 28.5%, its profit margin has increased from the 24.5% and 24.6% level. Improved edges provide space for recruitment. According to NASSCOM data, the IT field has 5.8 million employees and has increased by 1,26,000 in fiscal 2025.
Information Technology (IT) services companies are reportedly planning to reach 20,000 new students in 2025, aiming to expand their talent pyramid to prepare for managed services and artificial intelligence (AI)-led software development.
While IT companies will continue to add people to emerging technologies, the overall hiring prospects look bleak.
“Amid global economic uncertainty and the increasing use of AI, operating margins are expected to remain within the FY26 range, which could impact employee numbers,” said Tanvi Shah, director of CareEdge Advisory & Research.
