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Global Uncertainty Slows Growth for Indian Tech Exporters

IT Services

Business Honor
22 May, 2025

India's tech exporters are facing cautious spending and a slow recovery in the face of global economic uncertainty.

With the continued influence of global market conditions on the demand for IT services, India's top exporters of software services, including Tata Consultancy Services (TCS), Infosys, and Wipro, are expected to see flat-to-3% sequential revenue growth in the June quarter. In spite of a temporary halt on high reciprocal tariffs by the Trump administration and the beneficial trade agreements between the US, China, and the UK, the outlook in the IT industry remains subdued.

Industry commentators point out that IT clients are being "cautiously optimistic" with most keeping their non-essential technology budgets in focus. Muted deal momentum, sudden project pauses, and ramp-downs indicate that companies are leaning towards cost optimization and operational effectiveness. Nitin Bhatt, technology sector leader at EY India, pointed out that uncertainty related to trade agreements has caused clients to be cautious in IT investments.

Even as some caution has been eased off because of the US-China trade truce, much is still uncertain, especially with the threat of tariffs. Such a climate of uncertainty has led IT companies to postpone or retrench on spending, with several companies rushing deals ahead of possible budget freezes, while others are slowing down investments.

With such an environment, businesses are looking to invest more in AI in a bid to save costs and increase competitiveness. Top-line growth for India's largest IT companies is likely to remain slow at 2-3% for the balance of the year, while margins are likely to remain firm.

There are rays of hope that the UK-India Free Trade Agreement (FTA) may help Indian IT services firms, especially in large UK deals. But as Everest Group's Prashant Shukla points out, the increase in discretionary IT spending is probably going to happen gradually. Businesses that export IT services from India must prepare for a conservative scenario in the near future, even as the global market struggles with economic volatility.