IT‑Services Outlook Softens

Jefferies told investors in February that information-technology services companies are heading into 2026 with steady demand, but slower growth and more pressure from artificial intelligence. (economictimes.indiatimes.com) The brokerage cut its earnings-per-share estimates for the sector by 1% to 4% and said it now expects earnings to grow at a 6% compound annual rate over fiscal 2026 through 2028. Jefferies said a 16% drop in sector stocks year to date had not erased the downside risk. (economictimes.indiatimes.com) The core shift is in the work mix. Jefferies said artificial intelligence is pushing spending toward consulting and implementation projects while shrinking application managed services, which it said account for about 22% to 45% of revenue at many firms. (economictimes.indiatimes.com) Managed services are the long-running contracts that keep software, infrastructure, and business systems operating after a project goes live. Consulting and implementation are the earlier phases — designing the system, integrating it, and rolling it out — and those budgets usually move more with client confidence and capital spending. (accenture.com) That matters for companies selling enterprise infrastructure, cloud migrations, and modernization work. If customers delay services budgets or narrow projects to faster automation paybacks, integration timelines can slip even when interest in the underlying technology stays intact. (economictimes.indiatimes.com) Company results show the split already. Accenture reported $20.9 billion in new bookings for the quarter ended Feb. 28, 2025, down 3% in U.S. dollars, even as it logged $1.4 billion in new generative-artificial-intelligence bookings and 32 clients with quarterly bookings above $100 million. (accenture.com) Indian outsourcing groups are also reporting artificial-intelligence growth alongside restrained overall expansion. Tata Consultancy Services said on Jan. 12, 2026 that quarterly revenue rose 0.6% sequentially to $7.509 billion while annualized AI services revenue reached $1.8 billion and quarterly total contract value was $9.3 billion. (tcs.com) Infosys, before reporting full-year results on April 23, 2026, was still guiding for fiscal 2026 revenue growth of 1% to 3% in constant currency after its July 23, 2025 quarter. In that same release, it reported $3.8 billion in large deal wins and said 55% of that total was net new work. (infosys.com 1) (infosys.com 2) Not every firm is reading the market the same way. Capgemini said on Feb. 13, 2026 that 2025 revenue grew 3.4% at constant exchange rates, bookings rose to €24.4 billion, and it was targeting 2026 revenue growth of about 6.5% to 8.5% as generative and agentic AI topped 10% of fourth-quarter bookings. (capgemini.com 1) (capgemini.com 2) IBM has been making the opposite case from another corner of the market: that AI can expand services demand rather than compress it. On Jan. 28, 2026, IBM said its generative-AI book of business had reached more than $12.5 billion, including consulting signings tied to AI offerings. (ibm.com) The near-term question is not whether companies will keep buying AI. It is whether that spending lands in recurring service contracts or in shorter, less predictable project work that grows fast in bursts and slows just as quickly. (economictimes.indiatimes.com)