India’s IT services sector is poised for a muted first quarter of FY26 earnings season, as persistent macroeconomic uncertainty, global tariff concerns, and geopolitical volatility weigh on enterprise spending, particularly in discretionary and engineering R&D (ER&D) segments.

According to an earnings preview report from Equirus Securities, top-tier IT companies are expected to post constant currency (CC) revenue growth ranging from a decline of 2.6% to a modest growth of 1.4% on a sequential basis. While Infosys and LTIMindtree are projected to register positive growth, peers like TCS, HCLTech, Tech Mahindra, and Wipro may report quarter-over-quarter declines in CC revenue.

Among large-cap IT firms, Infosys is expected to lead the pack with a 1.4% quarter-over-quarter CC growth, aided by incremental inorganic contributions and ongoing cost optimisation. The company may tweak its FY26 revenue guidance to 1.0–3.25% while maintaining the EBIT margin outlook of 20–22%. HCLTech may experience a 0.9% quarter-over-quarter decline in CC due to seasonal weakness, with EBIT margins projected to decrease by 77 basis points.

TCS is likely to report a marginal 0.4% decline in CC revenue, primarily due to the ramp-down of large deals, such as BSNL, and slowdowns in international markets. Wipro, expected to post a 2.6% quarter-over-quarter CC decline, could offer guidance of between a de-growth of 1% to a modest growth of 1% quarter-over-quarter CC growth for the second quarter, factoring in client-specific setbacks like the Marelli bankruptcy.

However, select mid-cap players are expected to buck the trend. Coforge may post a strong 7% CC growth, driven by the ramp-up in large deals. Persistent Systems, Mphasis, eClerx, Zensar, and R Systems are also forecast to report healthy sequential growth, supported by robust deal pipelines and productivity gains.

In contrast, ER&D players like Cyient, KPIT Technologies, and L&T Technology Services (LTTS) are expected to face pressure, with 3.1–3.6% quarter-over-quarter CC revenue declines. The slowdown is attributed to weak demand in manufacturing and hi-tech segments and delays in deal execution.

Across the board, analysts expect cautious commentary from management. Clients are likely to delay new deal decisions amid global trade uncertainties, though investment in GenAI and automation remains a bright spot. To mitigate margin pressures, firms are increasingly focused on cost-take-out deals and AI-driven productivity gains.

As Indian IT navigates FY26, clarity on tariff and geopolitical fronts may prove crucial for deal visibility and budget stability—especially in a year where even seasonal strength hasn’t delivered a strong first quarter.