Infosys Cuts Revenue Forecast on Muted IT Services Demand

Infosys Ltd. cut the upper end of its sales growth outlook as global clients slow down technology spending at a time of elevated interest rates and geopolitical conflicts.

Revenue will grow 1.5% to 3% in the fiscal year through March 2027 on a constant currency basis, India’s second-largest outsourcer said Thursday. In April, it had guided for 1.5% to 3.5% growth. Analysts were forecasting 3.4% on average.

The Bangalore-based company also named its new chief executive officer designate in insider Ashiss Kumar Dash. Currently an executive vice president who heads a diverse business portfolio comprising over a dozen industry verticals, Dash will begin leading Infosys from April 1 next year.

“I want to make sure we remain in the leadership position,” current CEO Salil Parekh said in a news conference at the company headquarters. “And I get a smooth transition done.” Parekh is completing his second term as CEO and has been in the job for nine years.

Infosys’ net income rose 12% to 77.8 billion rupees ($806 million) for the first quarter through June 2026. Analysts estimated 78.34 billion rupees on average. Revenue surged 14% to 482 billion rupees, partly helped by a decline in the Indian rupee versus the dollar and euro.

Infosys and larger homegrown rival Tata Consultancy Services Ltd. are slashing expenses and reducing graduate hiring as demand for legacy IT projects wanes, with clients turning their attention to artificial intelligence. The Indian IT giants are trying to grab a share of AI spending, while also using the technology to boost their own efficiency.

Shares of Infosys and TCS have declined more than 40% since the start of last year as investors assess the impact AI will have on their long-term prospects.

The AI boom poses a major threat to India’s $280 billion IT services industry that’s thrived for decades on labor arbitrage and transformed the country into the world’s back office. While AI tools from OpenAI and Anthropic PBC are threatening to drive clients away, Infosys says it remains a key partner to its customers’ transformation projects. It already embeds AI into its offerings in a bid to curb costs and convince corporations to maintain or enhance their IT budgets.

Some IT service providers, like Mumbai-based TCS, have begun to pivot their business. The Tata Group company has partnered with OpenAI to build AI data centers and is in similar discussions with other tech giants.

Read More: TCS Is In ‘Advanced’ Talks for More AI Data Centers in India