IT Revenue Growth Forecast FY26: 4-6%, Hiring to Remain Low - Icra

New Delhi, Mar 12 (PTI) Indian IT companies are expected to see moderate revenue growth of 4-6 per cent in FY26, with hiring likely to remain subdued until growth accelerates towards the end of the fiscal year, according to credit rating agency Icra.

The agency projected attrition level to average 12-13 per cent over the near term.

"Icra projects its sample set of Indian IT services companies (which account for 60 per cent of the industry in revenue terms) to witness a moderate 4-6 per cent revenue expansion in USD terms in FY2026.

"Moreover, hiring is likely to remain low until the growth momentum picks up by the end of FY2026," it said.

Icra's sample set recorded a year-on-year revenue growth of 3.6 per cent in USD terms during the first nine months of FY2025.

This growth was part of a gradual recovery over the past three quarters, aided by a lower base from FY2024. Additionally, there was a slight increase in discretionary spending by customers in the BFSI and retail sectors in certain markets, along with investments in Generative AI initiatives that led to new orders, Icra said.

The sample set includes Birlasoft, Coforge, Cyient, HCL Technologies, Infosys, LTIMindtree, L&T Technology Services, Mastek, Mphasis, Oracle Financial Services Software, Persistent Systems, Tata Consultancy Services, Tech Mahindra, Wipro, and Zensar Technologies.

Icra Vice President & Sector Head Deepak Jotwani said the growth momentum for ICRA's sample set of IT services companies is likely to remain muted over the near term, owing to the looming uncertainty related to the imposition of the US trade tariffs and macroeconomic headwinds across the key markets of the US and Europe.

Policy changes by the US government for key sectors catered to by Indian IT services companies as well as future interest rate trajectory will remain the key monitorables, he said.

The IT industry experienced relief due to reduced attrition rates and wage cost inflation, which were significant concerns during FY2023 and the first half of FY2024.

"Icra expects hiring to remain low in the near term until the growth momentum picks up by the end of FY2026. Lower hiring activity can also be correlated with higher investments by the industry in GenAI and the expected benefits in terms of increased productivity and cost savings," the agency said.

Major Indian IT services companies have trained a significant number of their employees in Generative AI skills and are now expanding their capabilities and service offerings to provide GenAI-based solutions to their clients, it added.

"This has started to show results as the inflow of GenAI-related deals for major industry players has risen in recent quarters and is expected to pick up materially over the medium term, as overall technology adoption is more pervasive. The healthcare and BFSI sectors remain the early adopters of AI/GenAI capabilities and continue to invest in the same," Jotwani said.