India's information technology sector is anticipated to be one of the most stuttering performers this year, and may not experience a rebound in fiscal 2026, analysts say, following Accenture's report highlighting weak discretionary spending and demand.

Accenture, one of the most prominent IT services companies globally and a key indicator for the Indian IT industry, indicated that discretionary project spending in the quarter "was still limited" and noted no significant increases in client budgets.

Rising global trade tensions due to the latest US tariffs on trading partners have raised concerns about an economic slowdown in the states, a crucial market for Indian IT firms.

Currently, India's IT index has declined by 15.3 percent this year and is on track for its worst quarter since June 2022.

Major companies such as TCS, Wipro, Infosys, and HCLTech are observed to have witnessed shares drop between 11.2 percent and 18.1 percent this year.

Analysts from Kotak Institutional Equities predict that the lack of a strong demand recovery and weak mega deal activity in fiscal 2025 will lead to lower additional revenue from significant contracts in fiscal 2026 for Indian Tier-1 IT firms.

Citi Research has projected that IT firms within its coverage could experience a revenue increase of four percent in fiscal 2026, mirroring the expectations for fiscal 2025, while Morgan Stanley believes growth projections will be affected by reduced client spending.

Accenture also highlighted the postponement and cancellation of new contracts in the U.S. stemming from actions taken by the Trump administration. Nevertheless, while “Indian IT has limited exposure,” according to Citi analysts, this situation could "heighten competitive pressure in other areas."

As stated by Amit Chandra, deputy vice president at HDFC Securities, the banking, financial services, and insurance (BFSI) and healthcare sectors have begun to show signs of improvement.

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However, due to the uncertainty over the past two months, clients in various sectors are adopting a "wait-and-watch" approach and are likely to reduce their expenditures.