India`s IT services firms to grow 6-7 pc in FY27 in AI era
The Indian IT services firms are expected to witness 5-6 per cent revenue growth next fiscal (FY27), which could mean 8-10 per cent growth in the volume of work, a report said on Wednesday.
India's IT firms are poised to benefit from a strong US macroeconomic backdrop, as their top American clients reported one of their strongest quarters in many years, the report from HSBC Global Investment Research said.
Analysts at the research firm expected this momentum to lift corporate confidence and spur higher technology spending through 2025, offsetting some of the deflationary effects of artificial intelligence adoption.
As AI agents are evolving into multi-agent systems, prompting potential redesigns of enterprise software architectures and infrastructure, the shift could create new opportunities for Indian IT firms, the report said.
Further, the report cited industry estimates that suggested that AI could reduce the value of IT services by 8–10 per cent over the next three to four years as contracts renew, translating into an annual impact of up to 3-4 per cent in 2025–27.
However, Indian IT companies said they have so far compensated for this through higher project volumes from customers and hence total revenues continue to grow.
"In 2026, we believe there will be a push and pull between this deflationary impact and macro-tailwind," HSBC said.
The firm dismissed concerns over Agentic AI or advanced multi?agent systems that can potentially kill the software industry and impact IT services in the long term. While hyperscalers are capturing a growing share of enterprise tech budgets, HSBC argued that a complete shift away from services is unlikely.
India’s largest IT services firm, Tata Consultancy Services (TCS), in August announced a wage revision for around 80 per cent of its workforce, largely covering mid- to junior-level employees. The move came even as the company is preparing to lay off about 12,000 staff, or 2 per cent of its workforce, in 2025.
