Indian IT Services Projected for Growth Recovery by FY27

Indian IT services companies are projected to enter a growth recovery phase starting in FY27. This shift follows a three-year period of weak discretionary spending and industry concerns that artificial intelligence might compress the market through productivity gains.

Anand Rathi reports that the global AI investment cycle is pivoting from building capacity to proving payback. This transition is expected to drive increased demand for AI governance, data preparation, and services-driven integration. The brokerage suggests that AI is expanding the total addressable market rather than shrinking it.

Several major firms have already seen the impact of this shift. Tata Consultancy Services reported annualized AI revenue of $2.6 billion, while AI services accounted for 8.2% of total revenue at Infosys. HCLTech and LTIMindtree also reported growing revenue streams from AI services.

Despite the positive outlook, the recovery remains subject to risks. These include weak global economic conditions, pricing pressures, and the possibility that automation will disrupt lower-end IT services before companies can successfully transition to higher-value AI work.