India’s upcoming Indian IT earnings season is exposing a structural shift in one of the country’s largest employment engines: artificial intelligence is putting pressure on the billable-hours model even as clients remain cautious about technology spending. The result is expected to be another weak quarter for the country’s largest IT companies, with brokerages anticipating limited sequential revenue growth and possible cuts to annual forecasts.
Tata Consultancy Services will begin the earnings cycle on October 8, followed later in the month by Infosys, HCLTech and Wipro. The timing matters because the July-September quarter is normally supported by higher billing days and the start of new projects. Yet the first-quarter performance was muted, and analysts expect the second quarter to remain subdued. Jefferies has described the period as potentially the weakest sequential performance in three years for the six largest companies.
The pressure is not coming from one isolated slowdown. It reflects the interaction of two forces: customers are restraining spending, while artificial intelligence is challenging how IT services are priced and delivered. India’s technology industry, valued at $315 billion in the supplied report, has traditionally depended heavily on billable employee hours. As AI-based tools automate or accelerate parts of that work, clients are seeking greater productivity and lower prices, forcing companies to reconsider a business model built around the sale of human capacity.
That transition creates a difficult earnings equation. Companies must offer discounts or absorb pricing pressure while investing in new capabilities and changing delivery models. The source report says AI-led deflation could continue, while the demand environment has not improved. Higher oil prices and interest rates are identified as additional pressures by Jefferies, adding to the caution surrounding corporate technology budgets.
The immediate numbers point to slow growth rather than a collapse in revenue. Brokerages expect sequential revenue growth of between 0.7% and 3.5% for the top six firms. In rupee terms, year-on-year revenue is expected to rise by about 10%. However, those figures may overstate the underlying strength of the business because acquisitions, currency movements and the ramp-up of large deals can lift reported performance even when organic growth remains weak.
This distinction between reported growth and organic demand will be central to the earnings season. The largest firms are expected to post lacklustre growth after currency effects are excluded. Acquisitions and deal ramp-ups may support some companies, but the source report says organic revenue growth is likely to remain weak. For investors and employees, that makes the quality of growth more important than the headline increase.
The sector’s market performance reflects this uncertainty. The Nifty IT index has fallen about 27% in 2026 so far, compared with a 13.4% decline in the benchmark Nifty 50. The comparison does not establish a single cause for the sector’s underperformance, but it shows that investors are assigning a heavier penalty to the combination of weak demand, pricing pressure and uncertain growth forecasts in technology services.
Annual guidance will therefore be more consequential than the quarter’s revenue number alone. Infosys currently has a revenue-growth forecast of 1.5% to 3%, according to the supplied report. Kotak analysts expect the company to lower the upper end to 2.5%, while Jefferies expects a sharper reduction, to a range of 0.5% to 2%. Any change would signal how management teams interpret the durability of client caution and the extent of AI-related pricing pressure.
The expected performance is uneven across companies. Brokerages cited in the report expect HCLTech and Tech Mahindra to lead among the larger firms, while Wipro is expected to lag. These projections show that the AI transition is not affecting every company in the same way. Exposure to particular service lines, the pace of deal conversion and the ability to turn new technology into commercial offerings can create different outcomes even when companies face the same broad market conditions.
Margins may receive limited support from the rupee’s depreciation, which can offset some pricing pressure for exporters. That benefit, however, is not uniform or guaranteed. Foreign-exchange hedging losses could weigh on profit at Tech Mahindra, Coforge and Hexaware. The result is an earnings environment in which revenue growth, pricing, currency movements and financial hedging are closely connected.
The urban significance of this shift lies in the sector’s scale as an employment and economic network. The industry employs nearly six million people in India, according to the source report. Its performance affects more than listed-company valuations. It influences household incomes, office demand, commercial real estate, transport patterns and the local economies of cities that have grown around technology employment. When companies slow hiring, defer expansion or seek productivity gains from automation, the effects can travel through these connected urban systems, even though the supplied report does not quantify those effects for individual cities.
The same employment scale also explains why the change in the industry’s operating model deserves attention beyond the stock market. A business model based on billable hours links revenue to the number of people deployed and the time charged to clients. AI-based technology weakens that link by allowing some tasks to be completed faster or with fewer workers. If clients expect the resulting productivity gain to appear as lower prices, technology companies may generate more output without receiving a proportional increase in revenue.
That is the central institutional challenge facing the sector. Companies must move from selling capacity to selling outcomes, automation and specialised expertise, while maintaining margins during the transition. The supplied evidence does not establish how quickly any individual company can complete that shift. It does show that firms are already being forced to rejig business models and offer steep discounts as AI changes the economics of service delivery.
Client caution makes the transition harder. In a strong demand cycle, companies can invest in new offerings while expanding their workforce and project pipeline. In the current environment described by the report, demand is largely unchanged from the previous quarter and clients remain restrained. That reduces the room for error: companies must adapt to AI-driven pricing pressure at the same time as they compete for a limited pool of new spending.
The policy and urban-economy question is therefore not whether AI will affect Indian IT, but how the gains and costs of greater productivity will be distributed. The available material does not provide evidence on retraining numbers, future hiring plans or city-level employment outcomes. It does establish that the sector is large, that its traditional billing model is under pressure and that the next earnings cycle will test management guidance on growth.
The October results will offer the next measurable evidence. Investors will watch whether reported revenue growth is supported by organic demand, whether margins can withstand discounts, and whether companies revise annual forecasts. For cities and workers connected to India’s technology economy, the more important signal will be whether the sector can convert AI-led productivity into a new source of growth or whether it primarily becomes a mechanism for reducing prices and slowing expansion.
