- Revenue Outlook:
Indian IT services companies are expected to see modest revenue growth in Q3FY26. Tier 2 IT companies are likely to outperform Tier 1 players, with Tier 1 revenue growth projected at +0.2% to +1.7% QoQ in USD terms. - Currency Impact:
The Indian rupee depreciated ~2.1% against the US dollar during Q3FY26, which may support INR-reported revenue growth. However, cross-currency headwinds could reduce revenue growth by 20–40 basis points. - Margins:
Operating margins are expected to remain broadly steady. Factors influencing margins include:- Rupee depreciation (supports margins in INR terms)
- Lower utilization due to furloughs and fewer working days
- Continued cost-efficiency measures (optimizing employee pyramid, subcontracting costs, and overall cost control)
- Demand & Deals:
- Demand environment has been largely stable over the past quarter.
- Companies are focusing on ramping up recently signed deals, mainly around cost optimization and vendor consolidation.
- Technology & Productivity:
- Adoption of AI tools is expected to increase revenue per employee, supporting overall productivity.
- Firms continue to invest in new-age technologies, balancing growth and margin stability.
Bottom Line:
Q3FY26 is expected to be a stable quarter for Indian IT companies, with muted revenue growth but resilient margins, driven by currency support, efficiency measures, and productivity gains from AI adoption. Tier 2 firms may see stronger performance relative to Tier 1 peers. (ANI)
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