IT major caps are expected to have a modest Q3 as sluggish demand slows pace
Indian IT Majors Likely to See Muted Q3FY26 as Demand Remains Soft
India’s large-cap IT services companies are expected to post a modest performance in the third quarter of FY26, with no meaningful recovery in demand during what is typically a seasonally weak period for the industry, according to estimates from multiple brokerages.
Top-tier firms including Tata Consultancy Services (TCS), Infosys, HCLTech, Wipro, and Tech Mahindra are projected to report sequential revenue growth of up to 2.3% in constant currency terms in Q3FY26. Analysts attribute the subdued outlook to furloughs, fewer working days, and continued macroeconomic uncertainty weighing on near-term client spending.
A weaker rupee during the quarter is expected to offer some currency tailwinds, partially offsetting operational headwinds, analysts said. Most large IT firms are scheduled to report their quarterly earnings in January, beginning with TCS and HCLTech on January 12.
Brokerages including Kotak Institutional Equities, Motilal Oswal, HDFC Securities, and ICICI Securities expect HCLTech to lead growth among tier-1 players, supported by a seasonally strong quarter in its software business. Wipro is likely to benefit from the ramp-up of large deal wins and the consolidation of its Harman DTS acquisition.
In contrast, TCS and Infosys, despite stable performance across core verticals, are expected to see slower sequential growth due to furlough-related disruptions and reduced billable days. Tech Mahindra may see early benefits from leadership changes and improved execution in the banking, financial services and insurance (BFSI) segment, analysts at Motilal Oswal noted.
Mid-tier IT services firms such as Persistent Systems, Coforge, and Mphasis are expected to outperform their larger peers, with revenue growth estimated in the range of 1.8% to 3.5% quarter-on-quarter in constant currency terms. Growth is likely to be led by Coforge and Persistent Systems, supported by better productivity and restrained hiring.
Continuing recent trends, BFSI is expected to remain the strongest-performing vertical across companies. “For the rest of the verticals, ramp-up of recent large deal wins is driving growth rather than any broad-based recovery in technology spending,” analysts at ICICI Securities said.
Acquisitions and small “tuck-in” deals continue to be a key strategy as Indian IT firms look to strengthen capabilities ahead of the next technology cycle, particularly in artificial intelligence. According to ICICI Securities, the top four Indian IT companies announced around 10 acquisitions in calendar year 2025, largely focused on niche capabilities and client access. TCS has publicly stated it is “pivoting to acquisitions” to remain competitive in the AI-driven landscape.
