India's IT sector likely to witness moderate 4-6% revenue growth in FY26, says ICRA

The revenue forecast comes after a 3.6% year-on-year income uptick recorded during the first nine months of the current fiscal

India’s crucial IT sector is likely to register a moderate 4-6 percent growth in revenue for the upcoming fiscal, credit rating agency ICRA said in a latest report.

Attrition levels are likely to be around 12-13% in the near term, ICRA said in the forecast for FY26. Indian IT services firms, which accounts for roughly 60% of the sector’s total revenue, will register achieve 4-6% growth in US dollar terms in the upcoming fiscal, the report added.

The revenue forecast comes after a 3.6% year-on-year income uptick recorded during the first nine months of the current fiscal, which was largely driven in part by FY24’s lower base. Investments in Generative AI, boost in BFSI’s discretionary spending also helped in the recovery.

However, on the hiring front, ICRA Vice President and Sector Head Deepak Jotwani said that the growth momentum is likely to remain muted in the near term due. This was largely attributed to disruptions caused by the US trade tariffs announced by Donald Trump.

Along with this, the macroeconomic challenges in main markets such as the US and Europe may also pose a challenge. Jotwani further added that policy changes in the US, specifically around interest rate will be some of the major developments to watch out for.