New Delhi: After three years of muted growth, the Indian IT services industry is poised for a sharp recovery beginning 2026, driven primarily by accelerating demand for artificial intelligence (AI) services, according to a sector thematic report by HDFC Securities Institutional Equities.
IT firms have transitioned from traditional digital transformation projects toward AI-centric engagements, with AI deals now forming nearly 74% of all contracts signed in the last six quarters, the report said.
Companies such as TCS, Infosys, HCLTech, Wipro, LTIMindtree and Tech Mahindra reported that the majority of their recent contract wins were focused on generative AI, agentic AI, machine learning and AI-led automation.
"The enterprise spending recovery is evident across multiple verticals such as BFSI, manufacturing, retail, hi-tech, and healthcare, with BFSI tech spend showing resilience and manufacturing experiencing a robust turnaround after stagnation," HDFC Securities said.
Global enterprise commentary suggests a stable demand environment, with companies prioritizing AI-enabled capabilities to achieve cost reductions, automation enhancements, and innovation acceleration, it further mentioned.
HDFC Securities expected growth acceleration for the sector in FY27E. It said this will be supported by the robust AI-led deal pipeline and broad-based vertical recovery, signalling renewed confidence.
"We expect growth to recover to 7.7% in FY27E vs average growth of ~3% for the last three years. This recovery manifests a transformational industry phase where AI is at the core of deal wins and enterprise investments, catalysing an uptrend in revenue growth and market optimism."
The report further analysed the total deals signed/announced over the last six quarters.
It highlighted that for the said period, HCL Tech showed a notable volume of deals with AI as the central theme, comprising 139 AI-focused deals out of a total of 194 deals, reflecting its strong positioning in AI-led service transformations and AI engineering innovations.
TCS demonstrated a robust AI engagement portfolio, with 81 AI deals out of 106 total deals, highlighting its strategic investments in AI platforms and operational modernization with AI capabilities.
Wipro's deal profile indicates an even higher relative focus on AI, with 83 AI-themed deals from 99 total deals, underlining its commitment to AI-driven delivery and digital transformation solutions.
Infosys, LTIMindtree, and Tech Mahindra also reflect a significant proportion of AI deals, with AI constituting the majority of their recent contract wins--demonstrating the widespread adoption of AI as a strategic imperative across major Indian IT services firms.