Infosys forecast upgrade boosts turnaround hopes for $283 billion Indian IT industry

India’s No. 2 software services exporter Infosys unexpectedly raised its revenue forecast on Wednesday, signalling a healthier demand outlook and fuelling hopes of a turnaround for the country’s $283 billion IT sector.

The upgrade comes amid signs of steady discretionary technology spending and renewed momentum in Infosys’ core financial services business. The announcement sent the company’s U.S.-listed shares up 10 per cent in early trade.

The outlook follows comments earlier this week from market leader Tata Consultancy Services, which flagged strong demand in 2026, pointing to a possible rebound for India’s IT industry after a prolonged slowdown.

Clients who had earlier cut discretionary spending amid tariff-related uncertainty are now funding artificial intelligence projects, helping revive demand across the sector.

AI drives recovery hopes

“There is an industry-wide recovery as certain tech spends can’t be postponed beyond a point. It’s this incremental improvement in demand that is helping the industry on a gradual recovery path,” said Centrum Broking analyst Piyush Pandey, who described Infosys’ forecast revision as a “positive surprise”.

For the fiscal year ending March 2026, Infosys said it expects revenue growth of 3 per cent to 3.5 per cent, compared with its earlier estimate of 2 per cent to 3 per cent. Three brokerages had expected the company to narrow the range to 2.5 per cent to 3 per cent.

“We have become (the) AI partner of choice for (the) largest clients in financial services and energy (sectors). Therefore, we see a good outlook even as we look into the next financial year,” chief executive Salil Parekh said at a post-results press conference.

Peers Tata Consultancy Services and HCLTech beat revenue estimates on Monday and also pointed to AI-led demand.

Infosys’ third-quarter revenue rose 8.9 per cent to 454.79 billion rupees ($5.04 billion), beating the LSEG-compiled average analysts’ estimate of 452.27 billion rupees. Revenue from the financial services segment, which accounts for nearly a third of total sales, increased 3.9 per cent.

The company, which won AI-led deals with Adobe and Siemens AG in 2025, did not disclose revenue from AI projects. Last month, Accenture also beat first-quarter revenue estimates on strong demand for AI-driven IT services.

Net profit for the quarter fell 2.2 per cent to 66.54 billion rupees, missing the average estimate of 73.79 billion rupees, after a one-time charge of 12.89 billion rupees linked to India’s new labour codes.

Large order bookings, defined as deals above $50 million, rose to $4.8 billion from $3.1 billion in the previous quarter and $2.5 billion a year earlier.

(With inputs from Reuters)