India’s Infosys cuts growth forecast despite AI gains

By the Editorial Team · Sunday, October 25, 2026

Infosys reported a 10.7 percent increase in quarterly revenue driven by strong demand for its AI services but lowered its annual revenue growth forecast to 1-2 percent due to ongoing economic and geopolitical challenges. The company faces heightened competition from generative AI technologies and is investing heavily in AI to capture new business and improve efficiency amid a challenging IT outsourcing market.

Indian IT services company Infosys has reduced its annual revenue growth forecast despite reporting stronger-than-expected quarterly earnings driven by increased demand for its artificial intelligence (AI) offerings. The Bengaluru-based firm, which is India’s second-largest software exporter and derives over 80 percent of its revenue from Western markets, announced the revision on Friday.

For the quarter ending in September, Infosys posted revenue of 492.44 billion rupees ($5.19 billion), reflecting a 10.7 percent increase compared with the same period last year and slightly surpassing analyst estimates of 491.32 billion rupees. Net profit also grew by 6.2 percent to 78.23 billion rupees. CEO and Managing Director Salil Parekh highlighted strong AI revenue growth as evidence of the company's differentiated market position and growing client confidence, noting that enterprises are increasingly adopting AI solutions at scale.

Despite these gains, Infosys lowered its revenue growth forecast for the fiscal year ending in March 2027 to a range of 1 to 2 percent, down from the prior estimate of 1.5 to 3 percent. This adjustment reflects ongoing challenges across the Indian IT sector, which has faced subdued client spending in recent years amid global economic uncertainties. The instability has been further compounded by geopolitical tensions, including the war in the Middle East, which has affected the IT outsourcing market.

Furthermore, the competitive landscape has shifted with the rise of generative AI technologies from companies like Anthropic and OpenAI, offering new methods to automate tasks that were previously outsourced to Indian firms. In response, Infosys and its peers have intensified investments in AI tools both to secure new business opportunities and to enhance operational efficiency by reducing labor-intensive processes.

The broader $315-billion Indian IT industry continues to navigate these complexities, balancing the challenges posed by evolving technology trends and global uncertainties with the potential growth offered by AI-driven digital transformation services.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.