Infosys cut its annual revenue-growth forecast as artificial intelligence increasingly disrupts the traditional outsourcing model that helped build India’s enormous information-technology services industry.
India’s second-largest IT services company now expects fiscal-year revenue growth of 1% to 2%, down from its previous forecast of 1.5% to 3%.
The underlying numbers illustrate the changing economics of the sector.
Customers are increasingly redirecting technology budgets toward AI and cloud services while demanding that traditional outsourcing providers pass productivity improvements back through lower pricing.
That creates an unusual challenge for the IT-services industry.
AI can generate new consulting and implementation work, but it can simultaneously reduce the labor required to perform software development and other services traditionally billed according to employee hours.
Infosys reported quarterly revenue of 492.44 billion rupees, or approximately $5.19 billion, an increase of 10.7% from a year earlier. Constant-currency growth was considerably weaker at 1.5%.
Net profit increased 6.2% to 78.23 billion rupees, although it fell short of analysts’ expectations.
There was one significant positive signal: large deal wins reached $5.2 billion, compared with $3.1 billion a year earlier.
That backlog could provide future revenue support, but the immediate issue is how quickly conventional outsourcing economics are changing.
The Indian IT industry has spent years positioning AI as a growth opportunity. Infosys’ forecast cut demonstrates the other side of that transition: customers expect AI to make existing technology work cheaper.
Investors will now watch whether stronger deal bookings can offset pricing pressure and slower underlying revenue growth.
