AI disruption weighs on FY27 outlook for IT services firms

New Delhi: IT firms’ FY27 earnings estimates have been lowered as artificial intelligence begins reshaping the services landscape. A report on Friday said earnings forecasts for FY27 have been reduced by about 1 per cent, while target valuation multiples for large-cap IT services and BPO firms have also eased amid uncertainty around AI adoption. According to Emkay Global Financial Services Ltd, FY27 and FY28 earnings estimates for large-cap IT services companies were trimmed by 1 per cent and 2 per cent respectively.

The report noted that the implied terminal growth for covered large-cap IT services companies now stands at around 5–6 per cent in rupee terms, broadly reflecting trends seen over the past decade. Emkay also reduced target multiples by about 20 per cent for IT services firms and nearly 32 per cent for BPO companies. Despite the cuts, the report said steady operating performance and clearer disclosures on how companies are adapting to technological shifts could help restore investor confidence. It added that consistent execution and improved visibility on progress over the coming quarters may gradually lift sentiment and support a recovery in valuations.