NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
IDBI Capital Report
The Indian information technology services sector is stepping into FY27 with a mixed outlook, according to the brokerage firm IDBI Capital. While artificial intelligence (AI) continues to drive significant client interest and strategic investments, overall demand conditions remain subdued as enterprises stay cautious on discretionary technology spending.
In its Q1 FY27 sector preview, IDBI Capital said IT companies are increasingly using mergers and acquisitions to strengthen AI capabilities, broaden customer bases, expand geographically, and build expertise in emerging technologies. The brokerage believes these investments demonstrate the industry’s efforts to position itself for the next wave of growth despite near-term business challenges.
According to the brokerage, revenue growth is expected to remain soft in the near term as clients continue to adopt a conservative approach toward technology spending. Decision-making cycles have lengthened, particularly for discretionary projects, delaying the conversion of deal pipelines into revenue.
Among key verticals, the banking, financial services and insurance (BFSI) segment remains the strongest demand driver for Indian IT service providers.
In contrast, telecom and certain manufacturing segments continue to face pressure, limiting broader sector growth.
IDBI Capital noted that while AI-related projects are gaining traction and helping offset some weakness in traditional technology services, the pace of AI-led spending is not yet sufficient to fully compensate for slower demand across legacy service lines.
The brokerage also highlighted a gradual shift in workforce requirements across the industry. Companies are increasingly seeking talent with expertise in AI, data analytics, consulting, and solution design as enterprises focus on digital transformation and next-generation technologies.
At the same time, hiring demand for traditional software development and testing roles has moderated, reflecting changing client priorities and evolving business models.
Despite the current slowdown, IDBI Capital believes the sector is laying the foundation for future growth through investments in AI capabilities, platform-led offerings, and strategic acquisitions. The brokerage expects companies with strong digital portfolios, diversified client exposure, and execution capabilities to be better positioned as demand improves over the medium term.
With Q1FY27 earnings season approaching, investors will closely monitor management commentary on deal pipelines, AI monetisation opportunities, hiring trends, margin outlook and discretionary spending recovery across major sectors.
Click on the attachment to read the full report:
ALSO READ: Union Bank of India Shares In Focus As IDBI Capital Initiates Covearge — Check Target Price
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence,
Sharp Market Insights,
Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
