Bookings grew 10% in FY26. Revenue grew 2%. Headcount fell. The four assumptions that made the sector a buy for a decade have weakened at the same time, and for the first time.
Cost control can buy time, but it cannot replace demand forever. The next few years will probably depend on whether these firms can create new revenue streams without relying on headcount growth. One thing I kept wondering while reading this was whether Indian IT firms are structurally late to the AI transition, or if the market is underestimating how quickly they can adapt once enterprise spending stabilizes. You mentioned partnerships and platform-led revenue, but I’m curious what concrete signals you would watch for over the next 12 to 18 months that would convince you the sector has actually found a new compounding engine rather than just defending margins during a slowdown.
Cost control can buy time, but it cannot replace demand forever. The next few years will probably depend on whether these firms can create new revenue streams without relying on headcount growth. One thing I kept wondering while reading this was whether Indian IT firms are structurally late to the AI transition, or if the market is underestimating how quickly they can adapt once enterprise spending stabilizes. You mentioned partnerships and platform-led revenue, but I’m curious what concrete signals you would watch for over the next 12 to 18 months that would convince you the sector has actually found a new compounding engine rather than just defending margins during a slowdown.
very well written Manish!