The Indian IT services sector is expected to post another subdued quarter, with no meaningful improvement over Q1FY26, as global clients delay large tech initiatives amid macroeconomic and tariff uncertainties. Analysts also expect Q2FY26 constant-currency (cc) revenue growth to remain modest.

Mid-sized IT firms are seen outperforming the larger ones with some of them having gained scale and maturity to win cost-saving deals, they said.

‘Uncertainty pause’

The industry is in what analysts describe as an “uncertainty pause,” where enterprises have not cut budgets but are strategically deferring new projects. As clients reel under the uncertainties, there is hesitation to commit additional dollars to large initiatives.

A Motilal Oswal Financial Services Ltd. (MOFSL) report observed that

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