Indian IT Services Projected to Grow 6-8% in Fiscal 2026, Reports Crisil

The Indian information technology (IT) services sector is expected to maintain a steady growth rate of 6-8% in fiscal 2026, despite ongoing macroeconomic challenges and uncertainties in key international markets like the US and Europe, according to a report by Crisil Ratings.

The projected growth for the Indian IT sector is largely attributed to the benefits of currency depreciation, which will provide a 2% boost to revenue. This would mark the third consecutive year of mid-single-digit growth for the sector, signaling its resilience amid global economic pressures.

Strong Revenue Contributors: BFSI and Retail Segments Lead the Way

A significant portion of the growth is expected to be driven by key sectors, with nearly two-thirds of the revenues originating from Banking, Financial Services, and Insurance (BFSI) at 30%, followed by retail (15%), manufacturing (10%), and healthcare (10%). The remaining share of revenue comes from technology services, communications, and media.

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In fiscal 2025, while revenue from the BFSI and retail segments saw a modest recovery, growing by 2% in constant currency terms, growth in manufacturing and healthcare remained subdued, with a 3-4% increase amid persistent macroeconomic challenges.

Operational Profitability and Strategic Focus on AI Adoption

Despite these challenges, operating profitability within the IT services sector remains strong, supported by moderate employee additions and low attrition rates. Anuj Sethi, Senior Director at Crisil Ratings, emphasized that IT spending will continue to focus on driving efficiency, consolidating operations, and optimizing costs in the near term.

The growth is further bolstered by the increasing emphasis on artificial intelligence (AI) and generative AI (Gen AI). While AI adoption is still in its early stages, IT services companies are integrating AI-driven solutions with their traditional offerings, making them more efficient for end-users and driving demand across various sectors.

Hiring and Acquisitions: A Cautious Approach

In fiscal 2026, Crisil expects domestic IT services providers to remain cautious about fresh hiring. The focus will shift to maximizing employee utilization, projected to be around 85%. Additionally, companies are likely to continue targeting small and mid-sized acquisitions to expand their product offerings and digital capabilities.

Resilience Amidst Challenges

The Crisil Ratings report highlights the ongoing resilience of the Indian IT services sector, which continues to thrive in a challenging global environment. Despite slower growth in certain segments, the sector’s healthy deal wins and focus on cutting-edge technologies like AI ensure it remains on track for sustained growth in fiscal 2026.

The study covered the top 24 Indian IT services providers, accounting for 55% of the estimated industry revenue, which is expected to reach Rs 15 lakh crore this fiscal.