Explained: Why Indian IT stocks are under pressure

Dublin-headquartered IT and consulting company Accenture released its latest earnings report on June 18 (Thursday). The company not only lowered its full-year revenue growth guidance but also reported weakness in new bookings. While management remained optimistic about AI-led growth, concerns around client spending and incremental business opportunities for Indian IT companies have raised concerns over the sector’s FY27 growth outlook. 

What is triggering the latest pressure on Indian IT stocks? 

The BSE IT index opened sharply lower, falling nearly 5% in early trade after global IT and consulting major Accenture lowered the upper end of its FY26 revenue growth guidance to 4% from the earlier 5%. The company now expects revenue growth of 3%–4%, compared with its previous guidance of 3%–5%. Accenture also reported weakness in demand, with new bookings declining 3% year-on-year (in reported currency terms) to $19.3 billion from $19.7 billion in Q3FY25 while sequential bookings fell 12.6%. The stocks of the company on the New York Stock Exchange were down 17.97% at the close of trading. Indian IT-listed ADRs of Infosys and Wipro were also in the red as a fallout of the numbers. Infosys and TCS saw the biggest hit, with the stocks on BSE down over 7% and 5%, respectively.   

What led to Accenture trimming its full-year revenue guidance?  

Against the backdrop of macroeconomic uncertainty, Accenture expects fourth-quarter FY26 revenue growth to decline 0.5% year-on-year and has guided for full-year revenue growth of 3% to 4% in reported currency, including an estimated 1% impact from its US federal business. On the back of the West Asia crisis, the company also flagged pressure on discretionary spending while the already-stressed automotive sector faced additional headwinds from higher fuel prices. Commenting on weakness in overall EMEA revenue, Julie Sweet, Chair and CEO of Accenture, said that the impact in the Middle East would depend on how quickly people would start to focus on growth.   

How is demand shaping up for IT firms and the AI factor at play?   

Despite weaker new bookings, Accenture remains bullish about AI-led growth, indicating that there is a steady increase in the average size of AI projects. “We're starting to have those green shoots of where clients have more mature digital cores where we've helped them in the next step of these bigger AI programs. And that fundamental building of every quarter is continuing. The demand is the same, getting ready for AI and then deploying AI,” Sweet said on the optimism around AI and as a tailwind for the industry as a whole. While the company's consulting business is seeing better traction compared to managed services, Sweet noted that AI implementation has been faster in the segment with focus on greater efficiencies and growth. "We are seeing the nature of these programs with managed services evolve, with clients asking for more consulting and AI expertise within them, exactly the shift we have been positioning for," she added.   

What does Accenture’s latest results mean for the Indian IT firms?   

Analysts at Motilal Oswal Financial Services see Accenture’s results as a negative for the Indian IT space, especially given the outsourcing bookings are down 14.7% YoY. “We expect 1QFY27 outcomes for most Indian IT large-cap companies to be similarly soft. On AI implementation, as we wrote in our report dated 20th May’26 (IT services: More questions than answers), we believe the AI implementation opportunity will surely materialise, but it may not accrue to the traditional vendors like it did in the past and a new, platformised AI native vendor template will emerge,” the report said.   

Similarly , Nomura noted that the clients are moving beyond proof of concepts to live use cases in AI and believe AI to continue to drive the demand for core fundamental elements like cloud, data, and platform modernisation services.  

On the outlook for the Indian IT sector, a Nomura note said that while the Middle East conflict could weigh on growth in 1HFY27, a sharp growth revival hinges on macro improvement. “We expect the conflict in the Middle East impact to have some effect on revenues in the near term for Indian IT services. We also expect AI projects to start becoming bigger as clients move from POC to live projects. However, a sharp growth revival hinges on macroeconomic improvement particularly in the US,” the research note added.