For almost two decades, Indian IT was like a “no-brainer” growth story – double-digit revenue growth, huge hiring, and campus offers everywhere. But after 2023–24, many people started asking a tough question: “Why are Indian IT companies suddenly slowing down?”
If you follow stock markets, work in IT, or are a student planning a tech career, you’ve probably seen headlines about weak IT earnings, delayed projects, and lower hiring. At the same time, everyone is talking about AI, cloud, cybersecurity, and digital skills – so is IT really “down”, or just changing shape?
In this blog, let’s break down in simple language:
- What actually changed for Indian IT after 2024
- Key reasons why growth slowed down
- What research and data say about the outlook till 2026
- What this means for jobs, skills, and businesses in India
Quick Snapshot: What Changed After 2024?
Before we go deep, here’s the big picture:
- Growth moved from high double digits to low single digits for many large IT companies.
- Clients in the US and Europe became more cautious with their tech budgets.
- Big “digital transformation” projects slowed; companies started focusing on cost-cutting.
- Fresh hiring dropped, and many firms focused on better utilisation of existing employees.
That doesn’t mean IT is dying – it means the easy, hyper-growth phase ended, and the industry entered a more mature, slower but more selective growth cycle.
Why Indian IT Companies Slowed Down After 2024
1. Global Demand Became Weak and Cautious
Indian IT is heavily dependent on clients in the US and Europe, especially in sectors like banking, financial services, retail, and manufacturing. After 2023, many global companies faced:
- High inflation and high interest rates
- Slower GDP growth expectations
- Pressure to cut costs and protect margins
The direct impact? Clients started delaying, resizing or cancelling big IT projects, especially those that were not “must-have” but “good-to-have”. Discretionary IT spending – things like new digital experiences, experimental apps, or large transformation programs – became the first to be cut or postponed.
2. From “Growth at Any Cost” to “Efficiency First”
During the post-COVID digital boom (around 2020–2022), many Indian IT companies hired aggressively, sometimes more than they immediately needed, assuming that growth would stay very strong. When growth suddenly slowed after 2023:
- Bench size became larger than comfortable
- Utilisation needed to improve
- Companies cut back on new fresher hiring
So instead of adding new people, many companies started focusing on “doing more with the same team”. For the outside world, this looked like the sector “getting down”, but internally it was a resetting of cost structures.
3. Shift in Skills: Legacy vs. New-Age Tech
Another big reason for the “confusion” is the skill mismatch. While demand for generic skills and legacy technologies (old systems, basic support, etc.) slowed down, demand for:
- Cloud, microservices
- Data engineering and analytics
- AI and machine learning
- Cybersecurity
- Product & platform engineering
- Consulting plus tech (solutioning)
was either stable or rising. So, someone with outdated skills felt the slowdown more than someone working in modern tech stacks. That’s why you see layoffs in some areas and massive hiring in very niche roles at the same time.
4. AI and Automation Changed the Conversation
With the rise of generative AI and advanced automation tools, clients started asking: “Can we achieve the same outcome with fewer people and more automation?”
This doesn’t kill the IT industry, but it changes the type of work:
- Less low-end repetitive work
- More high-value design, integration, and governance
- More demand for people who can combine domain + tech + AI
Indian IT companies are in the middle of this shift, which makes growth look slow temporarily while they re-tool their offerings.
5. Clients Want “Outcomes”, Not Just “Bodies”
Earlier, many deals were classic outsourcing: “Give us 100 developers, 50 support staff” etc. Now global clients want:
- Outcome-based contracts (pay for result, not just hours)
- Platform-based solutions
- Co-created products and IP
This is good in the long term, but it requires Indian IT to:
- Invest more in R&D, tools, platforms
- Take higher risk on outcome-based pricing
- Build deeper domain expertise
All of that takes time. So 2024–2025 is a transition phase where the old model is slowing, and the new model is still being built.
So, Is the Future Dark? What Does 2026 Look Like?
Short answer: No, the future is not dark. But it is different. 2026 is unlikely to be a crazy boom year like the early digital wave, but most research and expert commentary suggest: gradual recovery, more focused growth, and a big shift in skills and business models.
1. Slow but Improving Growth
Industry bodies and research firms expect the Indian tech/IT sector to:
- Grow in low to mid single digits in the short term
- Cross new revenue milestones around FY2026–27
- See better margins as companies become more efficient and automate more
In simple words: growth is not dead, it’s just slower and more disciplined.
2. IT Spending in India Itself Is Rising
Earlier, the Indian IT growth story was mostly about exports. Now, something new is happening: domestic IT spending is growing strongly. Indian enterprises, startups, banks, and even government are investing heavily in:
- Digital public infrastructure
- Fintech and UPI ecosystem
- GovTech platforms
- Smart cities and digital governance
- Make in India + digital manufacturing
That means even if export growth is slow, the home market is becoming a solid growth pillar for tech and IT services.
3. 2026–27: More AI-Driven and Product-Like IT
By 2026, we can expect:
- More AI embedded into almost every project – from coding to support to customer service
- Indian IT companies launching their own platforms, tools, and accelerators
- Clients preferring partners who can bring ready-made solutions, not just manpower
The companies that invest in AI, automation, and IP now are likely to be the big winners in 2026 and beyond.
4. Job Market in 2026: Tough but Full of Opportunity
For professionals and students, 2026 won’t be a “mass hiring from all colleges” kind of year, but:
- Demand will be strong for people skilled in cloud, AI, DevOps, data, cybersecurity, and product engineering.
- Generic, undifferentiated skills will struggle.
- Roles that combine domain knowledge + technology (for example, finance + data, healthcare + AI) will be very valuable.
So the formula becomes simple: right skills + adaptability > number of years of experience.
What Should You Do – as a Student, Professional, or Business Owner?
If You Are a Student or Fresher
- Don’t depend only on campus placements; start building projects early.
- Learn at least one strong backend or full-stack skill, plus cloud basics.
- Pick up AI/ML concepts and tools (at least at a basic level).
- Participate in hackathons, internships, and open-source – they matter more now.
If You Are Already in IT
- Continuously upskill – don’t stay stuck in legacy tech for too long.
- Understand the business/domain side of your projects, not just coding.
- Learn to work with AI tools instead of fearing them.
- Build a portfolio of your work – GitHub, case studies, internal impact stories.
If You Are a Business Owner in India
- Use this “slow” phase to modernise your systems at better pricing.
- Adopt cloud, analytics, and automation to stay competitive.
- Don’t chase only cheap resources – choose partners who can guide your digital strategy.
Conclusion: Indian IT Is Not Falling, It’s Transforming
It’s easy to look at headlines about slower growth, layoffs, and weak quarters and conclude that the Indian IT story is over. But a deeper look shows something else:
- The old model of body-shopping and low-end outsourcing is slowing.
- A new model based on AI, platforms, consulting, and outcome-based work is emerging.
- 2024–2026 is a transition zone – uncomfortable, but full of opportunity for those who adapt.
For India as a country, IT will continue to be a major pillar – but with different skills, different business models, and different expectations. If you are willing to learn and adapt, 2026 may not be a threat, but a fresh start.
If you found this analysis useful, you can explore more articles and insights on my blog: https://deepakddubey.blogspot.com