Despite cautious forecasts for the Indian IT industry amid global macroeconomic and geopolitical headwinds, rising incomes and emerging industries could sustain broader household demand, signalling a resilient consumption story beyond sector-specific troubles.
India’s consumption story may prove more resilient than the recent gloom around technology jobs suggests, with Aditya Birla Sun Life AMC’s A Balasubramanian and Harish Krishnan arguing in a BusinessLine discussion that rising incomes, new industries and changing spending patterns could keep demand intact even as parts of the IT sector come under pressure. Their view comes at a time when investors are weighing whether layoffs and slower corporate spending will spill over into broader household demand.
That caution is not unfounded. Business Standard reported in April that India’s IT industry was facing a soft near-term outlook, with clients trimming spending and analysts expecting only 3% to 4% revenue growth. The slowdown was said to be most visible in banking and financial services, while worries about agentic AI and weaker earnings from Tata Consultancy Services and Infosys helped knock about $26 billion off the Nifty IT index’s market value in a single week.
Economists and brokerage houses have since painted a similarly restrained picture. The Economic Times said analysts were bracing for a measured FY27 for the sector, with global macro uncertainty, geopolitical risks and the shift towards AI reshaping the business model. JPMorgan, as reported by the Times of India, went further, warning that generative AI-led productivity gains, geopolitical uncertainty and changing enterprise budgets could keep pressure on Indian IT growth for longer than many investors expected.
Still, the wider economy may not move in lockstep with IT. Mint reported that AI is already being absorbed into mainstream business use, even as market fears around job losses grow. The same report noted that India’s IT and business process management industry accounts for a significant share of GDP, which helps explain why any large-scale disruption could have knock-on effects for banking, autos, housing and insurance. Yet the BusinessLine discussion suggests a counterargument: that employment is also being created in startups, data centres and other new-age businesses, leaving India’s growth story broader than one sector’s troubles.
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