Challenges Continue for IT Companies in Q2, Expecting a Better H2 Some growth is expected to return in the second half of this fiscal although it must be noted that Q3 is a seasonally weak quarter due to furloughs and lesser number of working days

Most Indian IT services companies reported lukewarm earnings for the second quarter ended September as macro-economic uncertainties continued in key markets of the US and Europe. Some amount of growth is expected to return in the second half (H2) of the fiscal.

Infosys has narrowed its full year FY26 revenue growth guidance to 2-3 per cent YoY in constant currency while maintaining margin guidance. Infosys expects near-term demand to remain stable but cautious and the H2 seasonality of furloughs and lower working days is likely to weigh on its performance in H2 due to which it has kept the upper end of guidance unchanged.

"Segment wise, for Infosys, demand in Financial Services remained strong driven by core modernization and AI driven focus on cost efficiencies and enhanced customer experience. Manufacturing & Retail remains impacted by tariffs. Deal wins remain strong for 2nd straight quarter with large deal wins of USD 3.1 billion of which 67 per cent were net new wins," analysts at PL Capital said.

Infosys management mentioned that demand continues to be driven by cost optimization and vendor consolidation programs, with increasing traction in AI-led productivity initiatives. They also indicated that large deals will not be significantly margin-dilutive — while they may exert initial pressure, profitability is expected to improve over time through Project Maximus and other operating levers. On AI, company mentioned that AI-led transformation remains a key growth driver, with Infosys having delivered over 2,500+ GenAI and 200 agentic AI projects.

LTIMindtree (LTIM) delivered a strong revenue performance, beating expectations with USD 1.18 billion in revenue, up 2.4 per cent QoQ in constant currency versus PL Capital's estimate of 1.9 per cent. Growth was broad-based across geographies and verticals, led by large deal ramp-ups in Consumer and Healthcare, which reported robust QoQ growth of 9.1 per cent and 10.2 per cent, respectively.

BFSI and High-Tech top accounts facing AI-led productivity recalibration, temporarily suppressing reported growth. Management sees this as a transition phase, not a structural risk. Management expects H2 growth to be stronger than H1 backed by deal wins and anticipated ramp up, expressing confidence of achieving double digit revenue growth in H2 in reported terms.

Wipro's Q2 sequential revenue growth of 0.3 per cent in constant currency was above PL Capital's estimates of -0.3 per cent, primarily attributed to continued momentum within Capco (BFS) and Tech vertical, which was partly offset by weakness in pockets beyond BFS. The company reported another quarter of elevated large deal TCV, that cumulatively adds up to USD 5.5 billion in H1, which in itself is higher than FY25 (USD 5.4 billion).

"However, the nature of the deals is concentrated more on the vendor consolidation and cost optimization side, which ideally comes at a higher tenure and lower margins. With that the company is aspiring to deliver better Q3 with a mid-range revenue guidance of +0.5 per cent QoQ. We expect the ramp up of two mega deals to support growth in H2, while also factoring in the seasonality and structural slowdown as the incremental headwinds. Additionally, we have not integrated DTS numbers into our forecasts, awaiting consolidation by the end of Q3.

Wipro management expects sustained momentum in the coming quarters, supported by the Phoenix engagement and ongoing BFSI consolidation deals. Healthcare remained stable to slightly positive YoY, with one mega deal signed during the quarter, though evolving US policy dynamics are creating structural shifts in client spending. In Consumer and Energy/Manufacturing, growth remained muted as tariff uncertainty prompted clients to focus on cost optimization and supply chain resilience.

Meanwhile, Technology and Communications benefited from rising AI adoption and legacy modernization programs, supporting steady growth within the segment. Wipro also unveiled "Wipro Intelligence," a unified suite integrating its AI platforms, agents and industry-specific solutions. The company has already deployed over 200 AI agents across delivery and client environments, signaling early-scale operationalization rather than just experimentation.