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Indian IT Growth Recovery Pushed to FY29 Amid AI Pressure: JPMorgan
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CNBC TV18•21-09-2026, 13:08
Indian IT Growth Recovery Pushed to FY29 Amid AI Pressure: JPMorgan
- •JPMorgan forecasts Indian IT services won't return to mid-to-high single-digit growth before FY29/CY28 due to AI-led pricing pressures and macroeconomic uncertainties.
- •Ankur Rudra of JPMorgan highlighted a prolonged recovery for large tech companies, citing macroeconomic weakness, AI deflation, and rising hardware costs as key challenges.
- •The tech sector faces another 4-6 quarters of AI deflation, acting as a near-term headwind, alongside renewed macroeconomic uncertainty from the Middle East conflict and potential interest rate hikes.
- •Sharply rising token and hardware costs are crowding out software and services spending, while a less favorable rupee adds pressure on margins for Indian IT firms.
- •In other sectors, UPI's 40 bps MDR is a positive for fintech, quick commerce sees intensified competition, and telecom consolidation continues with leaders gaining market share.
Key Questions Answered
According to JPMorgan, the Indian IT services sector is not expected to return to mid-to-high single-digit growth before the financial year 2029 or calendar year 2028.
The Indian IT sector is facing a three-cycle framework that includes macroeconomic weakness, rising hardware costs, and four to six more quarters of artificial intelligence-led deflation.
A 40 basis point Merchant Discount Rate (MDR) has been recently imposed on Unified Payments Interface (UPI) transactions, which is expected to create a significant industry revenue pool of approximately ₹170 billion.
