Indian IT Sector - Newspaper Summary

 The sources provide a detailed snapshot of the IT sector and AI trends in India as of September 2025, portraying an industry undergoing significant structural shifts driven by macroeconomic pressures, geopolitical factors (like US visa policies), and substantial momentum in Artificial Intelligence adoption, all set against a backdrop of resilient domestic economic growth.

IT Sector Performance and Global Headwinds

The IT industry's current health and future trajectory are signaled by the results of global consultancies, which serve as a bellwether for Indian IT.

Financial Indicators and Growth Outlook

Accenture reported quarterly revenues of $17.6 billion for Q4 2025 (up 7% in US dollars) and full-year 2025 revenues of $69.7 billion (a 7% increase). These results signal continued enterprise spending on cloud, AI, and consulting services.

However, this outlook is tempered by caution regarding near-term momentum due to several factors:

• Macroeconomic Pressures The global IT spending environment reflects a broader slowdown. High interest rates and cautious corporate budgets are affecting clients in North America and Europe, leading many to delay large-scale technology overhauls.
• Indian IT Outlook Analysts project that major Tier 1 Indian IT companies (TCS, Infosys, and HCL Tech) will see growth between 3–6 per cent in FY26, while mid-tier firms might achieve higher growth of 8–10 per cent due to niche AI expertise.
• Core Fundamentals One analyst noted that while Accenture’s IT service revenues appear stable, its core fundamentals are down, reflecting the broader slowdown in global IT spending.

The AI Momentum and Transformation

Artificial Intelligence (AI) is highlighted as a primary driver of enterprise spending and digital transformation, indicating a critical shift from experimental to scaled deployment.

Investment and Enterprise Adoption

Accenture reported significant investment in Generative AI (GenAI), with bookings reaching $1.8 billion for the quarter and $5.9 billion for the full year 2025. This robust demand for AI and strategic consulting is expected to drive Accenture’s projected FY26 revenue growth of 2% to 5% in local currency (or 3% to 6% excluding the US federal business impact). The rise in AI underscores the shift from mere experimentation to scaling AI responsibly. Indian IT firms are expected to continue leveraging AI and managed services to drive growth, embedding AI and cloud services to create sustainable revenue streams.

Societal and Cognitive Impact of AI

The sources also explore the potential negative consequences of AI adoption, which some researchers call "brain rot".

• Cognitive Cost Emerging research suggests that over-reliance on AI leads to a loss of the ability to think deeply, focus, and solve problems independently. Neural measurements showed that participants using AI writing assistants had a more than fivefold reduction in brain engagement linked to critical thinking compared to those writing unaided (0.009 versus 0.053).
• Productivity Paradox While AI promises increased speed and efficiency (already delivering 20–40 per cent efficiency gains in areas like document processing and supply chains), the technology can lead to attention fragmentation and dependency loops.
• Job Market Evolution Professionals are experiencing anxiety about job security due to AI replacement, which ironically can reduce their own productivity. However, AI is also a job creator, with 40 million new jobs estimated by 2030, spawning new roles like prompt engineers, data annotators, and digital ethicists. Upskilling is presented as the key safeguard against obsolescence.
• AI Training and Implementation Locally, ServiceNow launched ServiceNow University in Hyderabad to address AI skills gaps through free, on-demand courses. India is also seeing advanced AI applications in public services; for example, the Tirumala Tirupati Devasthanams (TTD) set up India’s first AI-powered Integrated Command & Control Centre (ICCC) for managing pilgrim traffic and safety using real-time wait times and density maps.

Adapting to Geopolitical Challenges and H-1B Visa Restrictions

A major factor shaping the Indian IT sector is the tightening of US visa policies, specifically the proposed $100,000 fee increase for H-1B visa applications.

Market and Operational Impact

• Market Reaction Concerns over the US H-1B visa fee hike and associated visa curbs led to persistent foreign institutional investor (FPI) selling in Indian markets. The Nifty IT index bore the brunt of this, plunging more than 6 per cent in one week.
• Delivery Model Shift Indian IT firms are proactively restructuring their delivery models by expanding nearshore hubs in regions like Latin America and Canada. These locations offer advantages such as overlapping time zones, cultural affinity, and competitive costs.
• Nearshore Expansion The long-term share of nearshore delivery is expected to rise from 5 per cent to 10–15 per cent, signifying a structural shift in how Indian IT serves global clients. For example, LTIMindtree is scaling up its nearshore centers, noting the time zone and cost advantages of Mexico.
• India's Scale Advantage Despite the strategic shift towards nearshoring, experts note a significant constraint: countries like Poland (a key nearshore hub for Europe) have a tech talent pool comparable only to that of a single Indian metro city like Chennai, meaning these regions cannot match the scale that India offers.
• GCCs in India While offshore work remains dominant (nearly 80% for top firms), India's role as a major hub for Global Capability Centers (GCCs)—a $64 billion market—is reinforced. Citigroup recently moved almost 1,000 tech jobs to India's business support centers following staff cuts in China, suggesting that global banks may increase reliance on Indian support centers due to the H-1B fee imposition.

Context in India’s Broader Economic Landscape

The trends in IT and AI are occurring within a vibrant yet volatile Indian economy:

• Economic Resilience and Consumption India's GDP grew 7.8 per cent in the April–June quarter, demonstrating continued economic resilience despite global uncertainty. This strength is supported by reliance on domestic demand and proactive policies.
  • The recent "GST 2.0" reforms are viewed as a game-changer, fostering a structural change in the economy intended to drive up domestic consumption and GDP growth.
  • The tax cuts lowered the simple average GST rate on essential consumption items from 11% to 9%. This boosted consumer confidence, leading to a surge in e-commerce sales (GMV up 23–25% year-on-year in the first two days of festival sales) and premium product purchases.
• Policy Intervention and Liquidity India appears to be navigating a "liquidity trap" where RBI rate cuts (100 basis points since February) have not led to commensurate private investment due to surplus capacity and low demand. The government is utilizing Keynesian fiscal stimulus through a large capex push (₹11 lakh crore) and income tax/GST concessions (saving households an estimated ₹48,000 crore) to boost demand.
• Domestic Technology Push (Swadeshi) The concept of Atmanirbharta (self-reliance) is a key governmental theme.
  • Government ministers are vocalizing support for home-grown software platforms like Zoho, urging an increase in "Swadeshi" technology adoption, with Zoho positioning itself to compete with global tech giants by doubling down on R&D, cloud infrastructure, AI, and proprietary tech to ensure privacy and security.
  • Similarly, London-based smartphone maker Nothing has made India the base for operations, R&D, and manufacturing for its CMF subsidiary, committing to invest over $100 million in the joint venture.
• Trade Challenges The ongoing trade dispute with the US, driven by India's oil purchases from Russia, remains a "thorny issue". US tariffs on Indian goods are expected to remain until this issue is settled, influencing the broader business environment.