Indian IT Firms Set for 5-6% Revenue Growth in FY27 Despite AI Challenges: Report

New Delhi: Indian IT companies are expected to see steady growth in the coming years, with revenues projected to rise 5–6 per cent in FY27, according to a report by HSBC Global Investment Research. In terms of workload, this could mean an 8–10 per cent jump.

The optimism comes from a strong US economy, as top American clients of Indian IT firms recently posted their best results in years. Analysts believe this will boost corporate confidence and drive higher tech spending in 2025, which could help offset some of the cost-cutting impact of artificial intelligence (AI).

AI adoption, especially as agents evolve into advanced multi-agent systems, may push companies to redesign their software and infrastructure. This shift is expected to create fresh opportunities for Indian IT providers. However, the report also warns that AI could reduce the value of IT services by 8–10 per cent over the next three to four years, especially as contracts are renewed. That could mean a 3–4 per cent hit to revenues annually between 2025 and 2027.

For now, Indian IT companies say they are managing to balance this pressure. Clients are giving them more work, which has kept overall revenues rising. HSBC predicts 2026 will be a year of “push and pull” between AI-driven cost cuts and global economic strength.

The report also played down fears that advanced AI systems could make IT services irrelevant. While cloud giants are taking a bigger share of enterprise tech budgets, HSBC believes services will remain essential and a complete shift away is unlikely.

Meanwhile, industry leader Tata Consultancy Services (TCS) recently announced a wage hike for nearly 80 per cent of its employees, mainly those at junior and mid-level positions. At the same time, the company is preparing to cut about 12,000 jobs—roughly 2 per cent of its workforce—in 2025 as part of restructuring efforts.