AI-led deflation, weak demand to keep IT sector growth muted in Q2FY27; Mid-tier firms may post healthy gains: Report

New Delhi [India], August 7 (ANI): The Indian IT sector is expected to remain under pressure in Q2FY27 amid weak demand and AI-driven pricing headwinds, with Tier-1 companies likely to see only modest sequential growth of 0-2 per cent, while mid-tier firms are projected to post moderate-to-healthy growth, as per a report by Kotak Institutional Equities.

The report noted the country’s IT sector reported a mixed Q1FY27 on the back of geopolitical tensions, macro uncertainty and client- and vertical-specific challenges dampening demand and delaying deal closures and project ramp-ups.