Banks' Caution May Weigh on IT Growth

Slow spending by lenders, advance of AI may hit FY26 revenue

- Varun Sood

Better growth for the Big Five of India's IT industry in the next financial year has come under doubt, with some of the largest banks, the biggest customers of homegrown IT firms, putting large tech spending projects on hold. The reason: Uncertainty over inflation rates and whether America's recent tariffs on goods from China and Mexico could start a new round of trade war.

After meeting company executives, at least two brokerages—JM Financial Institutional Securities Ltd and Kotak Institutional Equities—last week red-flagged some challenges that could dampen growth for the country's $283 billion IT industry. Optimism also weakened after Capgemini SE guided last month that the French IT services firm will experience no organic growth in the current calendar year.

Tata Consultancy Services Ltd, Infosys Ltd, HCL Technologies Ltd, Wipro Ltd, and Tech Mahindra Ltd had $78.03 billion in revenue last year, or about 30% of the country's IT industry.