IT firms face growth, margin pressure amid AI adoption wave
Margins continued to be under pressure with rupee depreciation providing some relief
image for illustrative purpose
Bengaluru: Amid rising adoption of AI, Indian IT firms were able to stabilize their revenue in 2025 though growth remained on a slow lane. Margins continued to be under pressure with rupee depreciation providing some relief. Howev-er, increasing AI usage in projects started to eat into the margins of legacy projects. In terms of recruitment, IT hiring gained some momentum in 2025 as compared to 2024, albeit slowly.
“From the beginning of the year, hope was built up that 2025 would be better year for Indian IT industry. However, it didn’t happen due tariffs and other macroeconomic situation. So, growth didn’t happen as expected but it didn’t fall. Revenue growth remained in mid-single digit. Ru-pee depreciation and momentum in the BFSI vertical helped the IT firms to manage growth this year,” Pareekh Jain, an IT outsourcing advisor & Founder of Pareekh Consulting told the Bizz Buzz. “After AI-led disruption, IT companies’ earnings showed some signs of stability. Indian IT firms have picked up pace in the AI space and are drawing similar percentage of revenue like their global peers,” he added.
The second quarter results of large and mid-tier IT firms provided some relief on revenue stabi-lisation. However, project sizes are getting shorter with higher usage of AI, leading to 20-30 per cent reduction in project pricing.
This year also saw multiple headwinds coming from Indian IT industry’s largest market, the US. With Trump administration’s policies on tariff, India IT industry faced slowdown in key verticals like manufacturing, automobile and retail among others. Imposition of 50 per cent of tariff on India and lingering negotiation for finalisation of a trade deal, led to sentimental impact on stock prices of IT firms this year.
Meanwhile, H1B visa faced the most stringent regulations in the US. As India is a major bene-ficiary with many IT companies sending professionals under this route, such policies impacted the Indian professionals the most in 2025.
Under Trump, the US has now introduced $100,000 fee for new applicants of H1B. Similarly, it has now decided to cancel the lottery system, which will now be replaced by merit-based evaluation like seniority and wage.
“In real term, H1B visa system is kind of over now. Even IT firms have started saying that they are not opting for this route anymore,” said Jain of Pareekh Consulting.
This year saw IT hiring gaining some momentum as compared to last year. “IT companies hired in good numbers this year. However, AI is fundamentally changing the kind of people being hired. Traditionally, Indian IT companies have been bottom-heavy with more junior people working at the low end of the pyramid. This pyramid structure is changing now as many entry-level jobs getting automated through Agentic AI,” he added. In operating margin front, Indian IT companies were able to maintain the margin in 2025 de-spite adoption of AI creating margin pressure. “Rupee provided some comfort this year due to sharp depreciation against US dollar,” said an expert.
