Mumbai, April 21, 2025 – Infosys Ltd., one of India’s leading IT services giants, has projected a weaker-than-expected fiscal 2026, citing persistent global economic uncertainties as a key headwind. The announcement, made during the company’s recent earnings call, has raised concerns about the broader outlook for India’s $250 billion IT industry, a cornerstone of the country’s economy. Following the forecast, Infosys’ stock price declined by 3.2% on the Bombay Stock Exchange (BSE), reflecting investor unease.
Global Challenges Weigh on Growth
Infosys attributed its cautious outlook to a combination of factors, including sluggish demand in key markets like the United States and Europe, rising geopolitical tensions, and potential disruptions from global trade policies, such as looming U.S. tariff hikes. The company highlighted reduced client spending on discretionary IT projects, particularly in sectors like banking, financial services, and retail, which account for a significant portion of its revenue.
“We are navigating a complex global environment,” said Infosys CEO Salil Parekh during the earnings call. “While we remain confident in our long-term growth, fiscal 2026 will likely see moderated revenue expansion due to macroeconomic headwinds.”
The company revised its revenue growth guidance for fiscal 2026 to 3-5%, down from the earlier 6-8% projected for fiscal 2025. This marks one of the lowest growth forecasts in recent years for Infosys, which has historically been a bellwether for the Indian IT sector.
Ripple Effects on the IT Industry
The subdued forecast has sparked worries about the health of India’s IT services sector, which employs over 5 million professionals and contributes significantly to the country’s GDP. Analysts point out that Infosys’ challenges are not isolated, as peers like Tata Consultancy Services (TCS) and Wipro have also flagged concerns about softening demand in Western markets.
“Infosys’ outlook is a wake-up call for the industry,” said Ankit Jain, a senior analyst at Mumbai-based brokerage firm Equirus Securities. “The IT sector has been resilient, but prolonged global economic slowdowns and policy uncertainties could strain growth prospects.”
The announcement comes at a time when Indian IT firms are grappling with additional pressures, including rising operational costs, wage inflation, and the need to invest heavily in emerging technologies like artificial intelligence (AI) and cloud computing. While Infosys has made strides in AI-driven solutions, the transition requires significant upfront investments, which could further squeeze margins in the near term.
Stock Market Reaction and Investor Sentiment
Following the announcement, Infosys’ shares fell 3.2% to ₹1,820 on the BSE, erasing gains made earlier in the week. The decline dragged the broader BSE IT Index down by 1.8%, signaling broader investor concerns about the sector’s near-term performance. Other IT majors, including TCS and HCL Technologies, also saw modest declines in their stock prices.
Investors are particularly concerned about the potential impact of U.S. economic policies, given that North America accounts for nearly 60% of Infosys’ revenue. Recent discussions around U.S. tariff hikes and immigration reforms could further complicate the operating environment for Indian IT firms, which rely heavily on U.S. clients and onsite workforce.
Broader Implications for India’s Economy
The IT sector’s slowdown could have ripple effects on India’s economy, which has been a global bright spot amid turbulent times. With the sector being a major employer and foreign exchange earner, a prolonged dip in growth could impact job creation and economic momentum. The Reserve Bank of India (RBI) and policymakers may need to monitor the situation closely, especially as the country navigates its own challenges, such as a weakening rupee and rising trade deficits.
However, some analysts remain optimistic about the sector’s long-term prospects. “The current slowdown is cyclical, not structural,” said Priya Sharma, a technology analyst at ICICI Securities. “Indian IT firms have a strong track record of adapting to challenges, and their focus on digital transformation and AI will drive future growth.”
