Summary:
TCS, Infosys, HCLTech and Wipro reported mixed Q2 FY27 growth despite expanding artificial intelligence businesses. AI is contributing more revenue, but cautious client spending, pricing pressure and automation continue to challenge traditional IT services and near-term growth expectations.
Why is IT sector growth weak despite rising AI revenue?
Leading Indian IT firms’ artificial intelligence (AI) revenue saw a robust rise in Q2FY27, but the benefits have not yet been reflected in a general recovery in business growth. Tata Consultancy Services, Infosys, HCLTech and Wipro reported modest constant currency revenue growth even as they expanded their AI operations. Traditional IT services are feeling the squeeze from pricing pressure, automation and cautious client spending.
Q2FY27 IT Results: HCLTech Leads in Sequential Growth
India’s four large IT companies reported a mixed bag of revenue performance for the September quarter.
| Company | Q2 revenue growth (CC, QoQ) | FY27 growth guidance |
| TCS | +0.5% | Not provided |
| Infosys | +1.2% | 1-2% |
| HCLTech | +2.3% | 2.5-4% |
| Wipro | 0.0% | Q3: -1.5% to +0.5% |
HCLTech Limited had the highest sequential growth of 2.3% due to its services and software business.
Infosys Limited was up 1.2% and Tata Consultancy Services Limited added 0.5%.
Wipro Limited reported flat quarter-on-quarter growth in constant currency IT services revenue.
How much AI revenue did TCS report in Q2 FY27?
AI is now a measurable revenue contributor instead of just being in pilot projects.
TCS announced annualised AI revenue of $3.1 billion, representing over 10% of its business in the quarter.
Infosys said AI contributed 10.5% to its revenue and the segment grew 29% quarter-on-quarter.
HCLTech’s advanced AI revenue stood at $219 million, up 28.4% sequentially in constant currency, representing about 6% of quarterly revenue.
The companies are expanding their AI offerings into software development, enterprise automation, cloud management, and business operations.
But the definitions of AI revenue vary from company to company, making apples-to-apples comparisons difficult.
Why is overall IT growth still slow?
The core issue is that AI-driven productivity improvements can result in less spending on traditional technology services.
Automation lets companies do some jobs with less people and tight delivery schedules. There is a growing demand from clients for lower costs, greater productivity and outcome-based contracts.
Thus, AI-related revenue growth does not necessarily mean that total revenue will grow at the same rate.
Infosys cut its FY27 constant-currency revenue growth outlook to 1-2% from 1.5-3% on weaker demand and pricing pressure.
Wipro’s guidance for the December quarter also signals uncertainty, with forecast sequential growth of -1.5% to +0.5%.
Meanwhile HCLTech kept its guidance for company revenue growth at 2.5-4%.
Why did Infosys shares fall after its Q2 FY27 results?
Infosys shares fell as much as 2.7% during the October 26 trading session after the cut in annual revenue guidance.
Around 10:53 AM IST, the stock was quoting around ₹1,136, down 1.5%.
That drop came despite $5.2 billion in big deal wins and strong revenue growth from AI. The new contracts were not enough yet to offset weakness in other parts of the business, the revised outlook said.
Where Are IT Stocks Headed?
The sector will be increasingly driven by its ability to turn demand for AI into profitable, recurring revenue.
Investors will want to see how the deals are executed, pricing trends, operating margins and client technology budgets.
Artificial intelligence is creating new business opportunities, but it is also changing the way traditional IT services are priced and delivered. The Q2FY27 results indicate that the transition is happening at a faster rate than the recovery in overall industry growth.
