IT Sector Guidance FY26: Infosys Lifts Revenue Outlook to 2–3%

Infosys (NSE: INFY) recently raised the lower end of its full-year FY26 revenue growth guidance to 2-3% on a constant currency basis, up from the earlier range of 1-3%. The company has also maintained its operating margin guidance in the range of 20-22% for the fiscal year. 

The improved guidance follows a stronger-than-expected Q2 performance, where Infosys delivered revenue growth of 8.6% year-on-year in rupee terms, and 2.9% in constant currency. Deal wins in large contracts remained robust, with ~US $3.1 billion of large deal TCV in Q2, of which 67% were net new deals. 

Key Factors Driving the Outlook

One of the critical drivers of this forecast upgrade is increased traction in enterprise AI and automation engagements. CEO Salil Parekh noted that clients are shifting from proof-of-concepts to implementation of AI & automation initiatives, which bodes well for the IT services landscape. 

On the cost side, Infosys continues to focus on productivity, employee-reskilling (especially in a “human+AI” workplace), and leveraging near-shore/onsite delivery models to drive margins.

Outlook for the IT Services Sector

India’s IT industry is projected to touch US$ 350 billion by 2026, contributing nearly 10% to the nation’s GDP.

The system infrastructure software segment is expected to reach a valuation of US$ 20.8 billion by 2030, expanding at a CAGR of 9.2% from 2023 to 2030. Similarly, the data annotation market, estimated at US$ 250 million in FY20, is anticipated to soar to US$ 7 billion by 2030, fueled by strong domestic adoption of AI technologies, even as the US continues to dominate global demand.

Also Read: Infosys Sets Record Date for ₹18000 Crore Share Buyback!

Conclusion

In revising its FY26 guidance upward and maintaining margin targets, Infosys has conveyed confidence in its business model and market positioning amid challenging global conditions. While the IT services sector is not yet in full flight, the inflection in client spending, especially around AI and digital transformation, offers cause for cautious optimism. 

For investors and stakeholders, the key will be monitoring how effectively Infosys and its peers translate these opportunities into sustainable growth and margin expansion going forward.

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