Indian IT Heads Into September-Quarter Results With Weakest Sequential Growth Expectations in Three Years

# Indian IT Heads Into September-Quarter Results With Weakest Sequential Growth Expectations in Three Years

Finin2min 2-minute summary

India's largest IT-services companies enter the September-quarter earnings season with unusually weak sequential growth expectations. Analysts cited by Reuters expect the top six firms to report roughly 0.7%-3.5% quarter-on-quarter revenue growth, with AI-driven pricing pressure and cautious client spending weighing on organic growth. TCS starts the reporting cycle on 8 October.

**Last verified:** 2 October 2026, 12:06 AM IST

Key verified facts

• Top six IT firms are expected to report their weakest sequential performance in three years.
• Quarter-on-quarter revenue growth expectations range roughly from 0.7% to 3.5%.
• Year-on-year revenue growth is expected around 10% in rupee terms.
• TCS reports on 8 October, followed by Infosys, HCLTech and Wipro later in the month.
• Nifty IT is down about 27% in 2026 so far.
• Analysts expect some margin support from rupee depreciation.
• AI-led pricing pressure and cautious client spending remain major concerns.

Why AI can reduce pricing

If AI allows the same project to be completed with fewer billable hours, clients may demand lower prices. That can pressure the traditional people-times-hours model.

Why revenue can still grow

Acquisitions, project ramp-ups and currency movements can support reported revenue even when organic demand is weak.

The rupee helps and hurts

A weaker rupee can lift translated foreign revenue, but hedging losses can offset part of the benefit for some companies.

Why guidance matters more than one quarter

Investors will focus on whether companies change full-year revenue-growth forecasts because guidance shows management's view of the demand pipeline.

Simple margin example

If a company earns $100 overseas, a weaker rupee increases the rupee value of that revenue. But if pricing falls or hedges were locked at a stronger rupee, the profit benefit can be smaller.

Employment relevance

The sector employs nearly six million people, so slower growth can influence hiring, salary increases and campus recruitment.

What to watch

Watch large-deal conversion, discretionary spending, AI-related pricing, utilisation, attrition and revenue guidance.

How AI can pressure revenue while helping margins

Automation can reduce the number of people needed for a project. Clients may demand lower prices, hurting revenue growth, while vendors may also save delivery costs. The net effect depends on how much of the productivity gain the IT company can retain.

Why constant-currency growth matters

Reported rupee revenue can rise because the rupee weakens even if the underlying volume of work barely changes. Constant-currency growth removes much of that exchange-rate effect and gives a cleaner view of demand.

What deal wins do not always show

A large announced deal can take months to ramp up and may replace older work rather than add entirely new revenue. Investors should compare total contract value with actual quarterly conversion and organic growth.

Workforce implications

If AI reduces billable hours and clients stay cautious, hiring can remain subdued even when revenue is stable. Utilisation, subcontractor spending and fresher hiring will therefore be useful operating indicators this quarter.

Why the comparison base matters

Quarter-on-quarter growth can be affected by billing days, acquisitions and project starts. Year-on-year growth can look stronger because of currency movements and the prior-year base. Investors should therefore examine both measures together with constant-currency organic growth.

Margin improvement can hide weak demand

A company can protect operating margin by slowing hiring, improving utilisation or cutting subcontractor costs even when revenue growth is poor. That can support short-term profit but may also signal cautious demand if it is accompanied by weak headcount growth and lower discretionary work.

What finance users should do

Investors should separate reported rupee growth from organic constant-currency growth and watch management guidance, AI pricing and deal conversion.

How to read an IT earnings release in an AI transition

Headline revenue growth can hide very different operating outcomes. Investors should separate reported rupee growth, constant-currency growth, acquisition contribution and organic growth. A company can show positive reported revenue because of currency translation even when underlying client spending is nearly flat.

AI makes the interpretation more complex. Automation can reduce the effort required for a project, which may lower billable hours and pressure traditional time-and-material pricing. At the same time, the same automation can improve delivery productivity and support margins if contract pricing does not fall as quickly as costs.

Five numbers that matter more than the headline

• Constant-currency revenue growth.
• Deal wins and, importantly, how quickly those deals convert into revenue.
• Operating margin after wage, subcontracting and travel costs.
• Attrition and employee utilisation.
• Full-year guidance and any change in assumptions.

A large total-contract-value announcement is not the same as revenue booked in the quarter. Multi-year deals may ramp gradually and can replace, rather than add to, existing work.

Why the rupee effect is two-sided

A weaker rupee can increase the reported value of dollar revenues, but companies also carry hedges and foreign-currency assets and liabilities. The net profit impact therefore depends on hedge positions and accounting, not only on the spot exchange rate.

Finin2min bottom line

The September-quarter question is not simply whether Indian IT still grows. It is whether companies can convert AI-led productivity into profitable growth while clients demand lower prices. Guidance, organic constant-currency growth and margin quality will give a cleaner answer than reported rupee revenue alone.

Source

• *Reuters — India IT earnings preview**
• Reuters, 1 Oct 2026 — top-six sequential revenue growth expected at about 0.7%-3.5%; TCS reports 8 October.
• https://www.reuters.com/world/india/ai-pressure-client-caution-cloud-indian-it-earnings-september-quarter-2026-10-01/

Disclaimer

Educational and informational content only. Not investment, tax or legal advice. Market prices and regulatory positions can change; readers should verify current applicability for their circumstances.