AI momentum builds, but Iran war raises risks for Indian IT
Analysts flag geopolitical risks and uneven AI adoption
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Bengaluru: A stable demand environment and rising Artificial Intelligence (AI) spending are the key takeaways from Accenture’s recently announced second-quarter results. However, analysts caution that a full-scale recovery for Indian IT services providers remains distant, given the uneven trajectory of AI adoption and the ongoing conflict in West Asia.
“Financial services and technology verticals have grown for Accenture. The macro environment remains stable, and AI is gaining momentum. New AI-led spending is entering the market,” said Pareekh Jain, IT outsourcing advisor and founder of Pareekh Consulting.
“Accenture is often ahead of the curve. We need to see how this plays out for Indian IT firms. As AI spending rises, downstream opportunities will likely flow to Indian service providers, albeit with a lag,” he added.
Accenture reported revenue of $18 billion for the second quarter, marking an 8 per cent increase year-on-year. The company also raised the lower end of its FY26 revenue growth guidance to 3–5 per cent from 2–5 per cent earlier, translating into organic growth of 1.5–3.5 per cent.
Its deal pipeline remained robust, with new bookings at $22.1 billion, up 6 per cent from a year ago. However, several brokerage firms noted that Accenture’s results do not signal a significant shift in the broader demand environment.
“Accenture’s managed services business — which has historically shown strong correlation with Indian IT revenues — is witnessing some deceleration compared to last year. Financial services, too, have seen a moderation in growth momentum on a year-on-year basis,” Morgan Stanley said in a report.
Similarly, Citi noted that demand trends remain stable, with client spending largely unchanged from last year and pricing continuing to be highly competitive. Analysts also pointed out that Accenture’s results do not yet reflect the impact of the ongoing conflict in West Asia, as they factor in business performance only until February. “For Indian IT services providers, the West Asia conflict will need to be factored in, which is not the case for Accenture’s current numbers,” Jain said.
The Middle East is an increasingly important market for Indian IT companies, and the ongoing conflict could weigh on their business prospects in the coming quarters.
