New Delhi
Indian IT services firms are expected to grow 6–7 per cent in FY27, even as artificial intelligence reshapes the global technology landscape, according to a report released on Wednesday by HSBC Global Investment Research.
The report highlighted that India’s IT companies are benefiting from a strong US economy, as top American clients recently posted their best results in years. This recovery is likely to boost corporate confidence and technology spending, supporting India’s IT sector despite challenges from AI adoption.
Artificial intelligence is expected to reduce the value of IT services contracts by 8–10 per cent over the next three to four years. This could mean a 3–4 per cent annual impact during 2025–27 as contracts are renewed. However, Indian IT firms are offsetting this through higher project volumes, which continue to drive revenues upward.
HSBC noted that as AI evolves into multi-agent systems, enterprises may redesign software architectures, creating new opportunities for Indian IT service providers. The report also dismissed fears that Agentic AI could completely replace the software industry, pointing out that while hyperscalers are gaining larger shares of tech budgets, a full shift away from IT services is unlikely.
The sector faces a “push and pull” between AI-driven deflation and macroeconomic strength, but growth momentum remains intact. India’s largest IT services company, Tata Consultancy Services (TCS), recently revised wages for 80 per cent of its staff, even as it announced plans to cut about 12,000 jobs this year, equal to 2 per cent of its workforce.