India’s IT Services Sector Analyzed

Key Points

• India’s IT sector is poised for growth after a period of slow expansion.
• Companies spent heavily on AI infrastructure, but this is now changing.
• Focus is shifting to AI services, like software and application upgrades.
• Growth is expected to start in H2 FY27, with faster growth in FY28.
• Companies using AI platforms will see increased revenue and better profits.
• IT service companies are now seen as a good investment opportunity.

India’s information technology (IT) services sector is preparing for a significant turnaround. Recent research suggests a change is happening – companies are moving away from building expensive AI computer systems and instead focusing on using AI to solve business problems.

For a while, many companies were spending a lot of money on building the basic tools needed for artificial intelligence, like powerful computers and the software to run them. This was called “capital expenditure,” or “capex,” and it went up a lot. However, this spending is now slowing down as the essential hardware is already available.

Now, the focus is on actually *using* AI – things like creating new software applications, modernizing existing systems, and helping businesses manage their data. Experts predict this shift will start as early as the second half of the business year 2027 and accelerate throughout 2028.

Companies like Infosys and HCL Tech are seeing increased demand for their AI services. Infosys, for example, has already increased its revenue forecasts twice in the first half of the current business year, showing strong customer interest. HCL Tech has secured a large amount of new contracts, highlighting the growing need for IT modernization.

These companies are using their AI tools to help other businesses improve their operations, which is driving revenue growth and boosting profits. IT service firms are now seen as a good investment due to this growth potential.

The shift in focus to AI services represents a significant opportunity for India’s IT services sector.