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Informist, Monday, Jul. 13, 2026

MUMBAI – Information technology players Infosys Ltd., HCL Technologies Ltd., and Wipro Ltd., are expected to see revenue growth of 2-4% over 2026-27 (Apr-Mar) and FY28, compared to a 4-6% growth in FY26, S&P Global Ratings said in a report Monday. Weak macroeconomic conditions have constrained IT spending over the past three years and will continue to do so. This, coupled with higher competition and shorter contracts amid artificial intelligence adoption, may weigh on revenue growth over this period, the ratings' agency said.   

Most domestic IT companies are expected to see the impact of AI-led disruption after 12–24 months, the agency said, adding, "For now, much of these companies' revenues derive from services that are less susceptible to AI disruption." However, revenue visibility could weaken as AI reshapes the landscape over the next three years, it said. Besides existing peers, Indian IT companies will have to contend with AI-native firms, while AI adoption cycles are likely to be shorter as these tools are quicker to deploy, S&P Global Ratings said. 

While AI disruption is expected to intensify competition in IT services over the next two to three years, existing high switching costs combined with limited budget flexibility at the customer end are expected to favour large-scale IT service providers, as long as they can meet customer demands at competitive rates. Conversely, weakening customer retention rates and profitability may relegate some firms. On the contrary, lower customer retention rates and profitability may relegate some firms, the agency said. 

Further, greater AI automation may force Indian IT companies to rebalance work across AI tools, subcontractors, and their existing workforce. As these tools improve, companies are likely to slow hiring and in some cases may reduce headcount, the agency said. In FY26, Infosys and Wipro reduced their staff by 5-6% from levels in FY23. "We see similar trends in companies such as TCS and Tech Mahindra," S&P Global Ratings said. 

On the margin side, "we believe economies of scale and higher productivity associated with AI will allow companies to maintain their margins above the industry average. Yet, margin upside is limited over the next 24 months," the agency said. While pressure on margins is not new to the sector, the scale of the pressure will depend on several factors, most importantly the increasing AI investments. Over the next two to three years, AI deployment will lead to new contract terms, investments in new technologies, and limited headroom for price renegotiations with customers. These factors will in turn squeeze earnings before interest, taxes, depreciation, and amortisation margin trends. 

That said, AI adoption is also expected to present opportunities for domestic IT companies. While generative AI may eventually automate certain routine tasks, current AI agents lack the contextual understanding to deliver outcomes without human input. Subsector such as digital transformation, IT consulting services, and analytics are expected to face lower displacement risk as AI can expand demand for integration, data architecture, governance, and enterprise-wide transformation, the agency said. "These are domains where top Indian IT companies like TCS, Infosys, HCL Tech, Wipro have established positions and may have a structural advantage," it added. 

The number of global capability centres in India has risen more than 30% over the past five years as enterprises invest in in-house AI tools while keeping costs low. Higher GCC demand could cannibalise some existing Indian IT revenues as companies choose to insource certain services. However, most enterprises may lack the expertise to develop and operate a GCC built from scratch. Infosys, HCL Tech, and Wipro remain preferred GCC partners in India given their track record, and they have been leveraging this need via a build-operate-transfer model. This cushions potential revenue loss and strengthens existing relationships, the agency said.

S&P Global Ratings has a stable rating outlook on Infosys, HCL Tech, and Wipro reflecting expectation that the companies will maintain their competitive position and profitability over the next 24 months. "In our view, Infosys, HCL Tech, and Wipro are likely to remain investment grade over the next 24 months," it said. These are companies with above-average industry margins, diversified customer relationships, and strong balance sheets. They have also dealt with disruption. They were successful in adapting to cloud disruption by partnering with hyperscalers, upskilling their workforce, and increasing offshore delivery, the agency said.  End

Reported by Arya S. Biju

Edited by Deepshikha Bhardwaj

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