Information Technology – Jul-Sep’26 Earnings Preview – Selective growth among broader challenges
Published on 03 Oct 2026
IT companies are expected to witness moderate improvement in Q2FY27, as macro headwinds from the Middle East conflict continue to weigh on client spending and decision-making. The Fed’s recent 25bps rate hike, its first since July 2023, and the possibility of another hike later in CY26 are likely to keep IT spending decisions muted. AI traction remains healthy, but smaller-sized and shorter-tenure AI projects are yet to offset leakage in traditional services, limiting the pace of revenue growth. We expect median Tier I revenue growth of ~0.9.0% QoQ in CC terms, with growth partly aided by acquisitions, while Tier II companies are expected to outperform with ~2.7% QoQ growth, supported by deal ramp-ups and stronger conversion of recent wins. Currency movements are expected to provide a limited cross-currency impact, with EUR and AUD appreciating 0.3% and 1.0% QoQ against USD, respectively, partly offset by a 0.9% depreciation in GBP. The ~1.0% QoQ depreciation in INR against USD should provide some margin support, albeit lower than in Q1.
