IT Sector Earnings Q1 FY 2027 Preview: Analysts Anticipate Challenging Quarter Amid AI and Macro Economic Pressures

IT Services Sector to Kick Off Earnings Season This Week

The IT services sector is set to begin its June-quarter earnings season this week, with tech companies led by TCS expected to roll out their numbers. However, street expectations remain muted due to macroeconomic uncertainty, AI-led disruptions, and geopolitical overhangs, which are likely to weigh on discretionary spending and decision-making cycles.

The first quarter of FY27 is typically a seasonally strong period, but management commentary during the final quarter of last fiscal year pointed to a soft start to FY27, driven by disruptions arising from the Middle East conflict and ongoing AI-led pricing deflation. Accenture's Q4FY26 commentary, which corresponds to Q2FY27 for Indian IT services, another seasonally strong period, indicates a risk of further earnings downgrades in Q2FY27.

Against this backdrop, investors will closely watch companies' FY27 guidance and demand outlook. Domestic brokerage firm JM Financial has issued a report on the sector, highlighting muted growth for large-cap IT companies. According to JM Financial, the top six companies are expected to post Q1 FY27 constant currency (CC) IT services revenue growth of 0.7% to 6.6% YoY (-1.2% to 2% QoQ, including acquisitions), impacted by macro uncertainty and AI productivity despite a seasonally strong quarter.