Indian IT services companies reported a strong rebound in client spending during the second quarter (Q2), highlighted by a 26% year-on-year surge in new deal wins. This marks one of the strongest signs of recovery after several sluggish quarters.
Beyond yearly growth, deal activity also improved sequentially, rising around 3% from Q1, reversing the decline seen earlier in the year. Over the last 12 months, deal flow has steadily improved too, showing that the pickup is not a one-quarter anomaly.
What’s Driving the Growth?
1. Revival in Enterprise Technology Spending
Global clients — especially in the US and Europe — have begun freeing up budgets that were earlier paused due to economic uncertainty. The spending is primarily directed toward:
- Application modernization
- Data engineering
- Cloud transformations
- Integration-led projects
2. AI-Linked Opportunities are Expanding
Companies are allocating meaningful budgets toward AI pilots and early deployment of AI-native workloads. While most of this spending is early-stage, analysts expect it to scale significantly from FY27 onward.
3. Delayed Projects Now Moving Ahead
Many deals that were stuck due to decision-making delays have now been approved, leading to a healthy pickup in Total Contract Value (TCV).
4. Industry Entering a “Stabilisation” Phase
Hiring, deal closures, and operating margins all show signs that the sector may have passed its weakest point.
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