Trump tariffs: Budget cuts by US firms to hit IT revenues in FY26

THE INDIAN IT services sector is likely to face challenges in FY26 due to increasing regulatory and economic uncertainties linked to the policies of the US administration under the presidency of Donald Trump.

- PADMINI DHRUVARAJ

Analysts believe that pauses in IT budgets by corporate clients, combined with these uncertainties, could delay the industry's recovery.

The proposed tariffs by Trump, aimed at boosting American manufacturing, could negatively affect major clients of Indian IT firms in the US, leading to reduced tech spending.

Trump's tariff strategy may increase costs for US businesses, making sourcing equipment more expensive and leading to reductions in large transformation projects, a key revenue source for Indian IT firms.

Kotak Institutional Equities and Motilal Oswal Financial Services predict that India's top IT firms — Tata Consultancy Services (TCS), Infosys, HCL Technologies, Wipro and Tech Mahindra — will report a maximum of 5% constant currency revenue growth in FY26.