IT’s Q2 earnings enmeshed in fog

IT companies are expected to see modest sequential revenue growth in Q2 FY26. The second quarter is usually strong, but as of now, IT investors are driving through the fog.

- Harsha Jethmalani

Tariff-induced uncertainties hindered the revenue growth of technology companies in QI FY26. Cut to now, the demand environment, although not deteriorating, remains uncertain. Clients are still cautious about the use of discretionary technology spending. Additionally, the recent hike in the H-1B visa fee and the proposed Halting International Relocation of Employment (HIRE) Bill have fuelled concerns about rising protectionism in US-a key market for IT companies. Rising protectionism could lead to higher operating costs and increased competition for Indian IT companies.

Tata Consultancy Services (TCS) will kick-start the Q2 FY26 earnings season for the sector, with its results to be declared on 9 October. "We expect revenue growth for our coverage at 1.2% sequential constant currency (cc) (+0.5% year-on-year cc). However, quarter-on-quarter growth in Q2FY26 will likely be the second lowest in a Q2 in the past five years," said Jefferies India on 30 September.