# AI Adoption Pressures Indian IT Sector Earnings > Source: > Published: 2026-05-26 11:14:40.677593+00:00 # AI Adoption Pressures Indian IT Sector Earnings Business Standard reports that **Indian IT stocks** have fallen up to **34% year-to-date in 2026**, versus the **Nifty50**'s **9%** drop, amid an industry shift toward AI spending. The rupee's depreciation, down **6.6%** in calendar 2026, provided a partial cushion, according to the article. Analysts cited by Business Standard say rising **total contract values (TCV)** and deal pipelines have not yet converted into revenue because of "pilot-led deployments, elongated decision cycles, and execution delays," a quote attributed to Manav Medewala of Mirae Asset ShareKhan. Kotak Securities' Sumit Pokharna is quoted saying Indian IT growth has slowed to around **3-4%** while global tech spending grows **10-13%**. Business Standard reports analysts continue to favour **TCS, Infosys, HCLTech, and Coforge** as names to watch for FY27. ### What happened Business Standard reports **Indian IT stocks** have fallen up to **34% year-to-date in 2026**, compared with a **9%** drop in the **Nifty50** index. The article attributes part of the market reaction to enterprises redirecting budgets toward AI infrastructure, models and software, reducing spend on traditional outsourcing and application maintenance. Business Standard notes the **rupee** depreciated about **6.6%** in calendar 2026, which provided some offset to revenue pressures. The piece quotes Manav Medewala, research analyst at Mirae Asset ShareKhan: "Despite strong deal pipelines and rising total contract values (TCV), conversion into revenue remains slow due to pilot-led deployments, elongated decision cycles, and execution delays." The article also quotes Sumit Pokharna, VP, Fundamental Research at Kotak Securities, saying global technology spending is growing **10-13%** while Indian IT services growth has slowed to around **3-4%**. Business Standard reports analysts continue to prefer **TCS, Infosys, HCLTech and Coforge** for FY27. The article further reports **TCS** posted **$12 billion** in Q4 deal wins and **$40.7 billion** in FY26 TCV. ### Editorial analysis - technical context Companies moving large portions of their IT budgets into AI infrastructure typically shift spend from labour-intensive, recurring services toward capital and software expenses. This pattern can produce a timing mismatch where **total contract values (TCV)** rise but near-term revenue and utilisation metrics lag because pilots and proofs-of-concept take time to convert into large-scale production engagements. ### Industry context Observed patterns in comparable transitions show slower revenue recognition, elongated sales cycles and margin compression for vendors whose core offerings are legacy application maintenance and outsourcing. Vendors that secure infrastructure-adjacent contracts or embed IP into larger transformation deals tend to report smoother revenue conversion, according to historical sector coverage. ### What to watch For practitioners and investors, watch three indicators: deal conversion rates from TCV to booked revenue, the share of client budgets shifted to infrastructure versus services, and sequential utilisation and billing rates reported by service providers. Also monitor currency movement trends; Business Standard highlights the **6.6%** rupee depreciation as a meaningful offset to dollar-denominated revenue pressure. ### For practitioners Industry observers should expect ongoing volatility while enterprises experiment with AI deployments. Companies and teams involved in integration, MLOps, and infrastructure procurement will likely see elevated demand even as traditional services units face compression. ## Scoring Rationale The story matters to practitioners because it documents a broad industry shift in client spend from services to AI infrastructure, creating near-term revenue conversion and staffing implications for Indian IT vendors. The impact is notable but not paradigm-shifting. Practice with real Ad Tech data 90 SQL & Python problems · 15 industry datasets [Active Search Campaigns by BudgetEasy](/problems/sql/active-search-campaigns-by-budget) [High CPC Clicks & Poor Landing PagesMedium](/problems/sql/high-cpc-clicks-poor-landing-page) [Campaign ROAS by Attribution ModelHard](/problems/sql/campaign-roas-by-attribution-model) 250 free problems · No credit card [See all Ad Tech problems](/problems/datasets/adtech)