The demand environment for IT services is stable rather than sharply improving, according to Accenture. Clients continue to prioritize large, strategic transformation programs with spending trends similar to 2025, said the global IT giant, which competes with tier-I Indian technology companies in outsourcing business and is often seen as an indicator of future prospects.
Accenture’s managed services (outsourcing) constant currency (CC) revenue increased 5% year-on-year in Q2FY26, outpacing the consulting business, the company told investors in its earnings call for the quarter ended February (Q2FY26)—Accenture follows a September to August financial year.
Sequentially, managed services growth moderated with softening deal wins, but the management expects a gradual improvement in H2FY26, supported by the conversion of large deals. Also, robust momentum in the BFSI vertical (year-on-year CC revenue up 7%) bodes well for Tata Consultancy Services (TCS), Infosys, Mphasis and LTIMindtree given their meaningful exposure to the sector. Currently, altering sentiments towards battered Indian IT stocks is a herculean task, requiring solid re-rating triggers that are nowhere to be found.
Accenture’s 4% year-on-year CC revenue growth in Q2FY26 was at the top-end of its 1-5% guidance. With strong deal bookings, sustained execution, and AI-led momentum, Accenture raised the lower end of its FY26 CC growth target marginally to 3-5% from 2–5%. “From an organic growth of 4% in FY25, Accenture is projecting 2.5% in FY26. Thus, the narrative of a slight pickup in organic growth in FY27 (by 100-200 basis points) for the Indian industry could be brought into question,” said a BoB Capital Markets report dated 20 March. “We believe the market has not given up yet on the near-term growth expectation while it is grappling with terminal value assumptions,” it added.
However, Accenture’s revised guidance does not factor in the potential impact if the macro environment deteriorates due to the escalation of ongoing geopolitical uncertainties, including the Middle East conflict. TCS, Infosys, HCL, Wipro, and Birlasoft derive about 6-17% revenue from the energy & utilities sector, and are particularly watchful, says HDFC Securities, adding that the impact on existing projects, however, is expected to remain contained.
AI emerging as a double-edged sword
Accenture sees AI (artificial intelligence) as a tailwind, aiding market share gains, deal wins and creating long-term growth opportunities. Q2FY26 total bookings grew 6% year-on-year to $22.1 billion, and it expects bookings from emerging AI and data ecosystem partners to double year-on-year in FY26.
Accenture’s increasing thrust on AI means that Indian firms will need to accelerate their AI-driven transformation offerings to stay competitive. The latest carnage in Indian IT stocks was fuelled by investor fears of deflation and that Gen-AI platforms like Claude (by Anthropic) and Palantir could upend traditional SaaS and IT services models. HDFC had initially pegged AI's deflationary impact at around 4%, but it cautions that the recent Gen-AI product launches have intensified this narrative, lifting deflation to 6-7% and thrusting the sector into a phase of uncertainty and slow growth.
Lower terminal growth rate assumptions have led to de-rating. The Nifty IT index is down 24% so far in 2026. JM Financial Institutional Securities concurs that AI will prove deflationary, but find apprehensions on terminal growth being zero as overly pessimistic. “While service providers attribute growth moderation to macro headwinds, the buzz around AI productivity is spurring enterprises to seek similar gains from their service partners—increasing the risk of another soft year," said the JM report dated 19 March.