IT Hiring to Remain Low until FY26, Revenue Growth to be Moderate
The Indian IT sector is expected to witness a slowdown in hiring until late FY 2026, according to a recent report by ICRA. The report predicts that the sector will experience moderate revenue growth of 4-6% during this period. This forecast is attributed to increased investment in GenAI (General Artificial Intelligence), which is expected to enhance productivity and cost savings for key IT firms.
GenAI is a type of AI that enables machines to perform tasks that typically require human intelligence, such as decision-making, problem-solving, and learning. As a result, IT firms are increasingly investing in GenAI to stay ahead in the competitive landscape. To capitalize on this trend, key IT firms are training their employees in GenAI skills, leading to more GenAI-related deals, especially in the healthcare and BFSI (Banking, Financial Services, and Insurance) sectors.
ICRA Vice President, Deepak Jotwani, emphasized that the IT sector is undergoing a significant transformation, driven by the adoption of GenAI. “The sector is expected to witness a moderation in hiring growth, as companies focus on upskilling their existing workforce to leverage GenAI capabilities,” Jotwani said in an interview.
The report suggests that the IT sector’s revenue growth will be driven by the increasing demand for GenAI solutions, particularly in areas such as data analytics, customer service, and supply chain management. As companies continue to invest in GenAI, they will require skilled professionals who can integrate these solutions into their existing operations.
The low hiring growth forecast is partly attributed to the IT sector’s current focus on automation and cost optimization. Many companies are adopting automation tools and processes to reduce costs and enhance efficiency, which may lead to a reduction in the need for new hires. Additionally, the sector is also experiencing a shift towards outcome-based contracting, where clients pay for specific business outcomes rather than hours worked. This change in contracting model may also contribute to a slower pace of hiring.
Despite the moderation in hiring growth, the IT sector is expected to continue its growth trajectory, driven by the increasing demand for digital solutions and services. The sector’s moderate revenue growth of 4-6% is expected to be driven by the adoption of GenAI, cloud computing, and other emerging technologies.
The healthcare and BFSI sectors are expected to be key drivers of GenAI adoption, as they require advanced analytics and automation capabilities to manage complex data sets and streamline their operations. The report suggests that IT firms with expertise in these areas will be well-positioned to capitalize on the growing demand for GenAI solutions.
In conclusion, the ICRA report suggests that the IT sector will experience a slowdown in hiring growth until late FY 2026, as companies focus on upskilling their existing workforce to leverage GenAI capabilities. The sector’s revenue growth will be driven by the increasing demand for GenAI solutions, particularly in areas such as data analytics, customer service, and supply chain management. As the sector continues to evolve, IT firms will need to prioritize upskilling and reskilling their employees to stay ahead in the competitive landscape.
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