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Oct 21 2026
Revenue growth of computer software industry likely to slow down
Overview
The Centre for Monitoring Indian Economy expects revenue growth in India’s computer software and information-technology industry to slow during the second half of 2026–27. Cautious spending by clients, delayed conversion of secured contracts into revenue and pricing pressure arising from artificial-intelligence-led productivity improvements are likely to limit the industry’s near-term growth.
Although software companies are expanding their artificial-intelligence businesses and securing transformation projects, continued weakness in traditional software services and uneven demand across customer industries may prevent a broad-based recovery. AI-related revenue is nevertheless expected to gain traction as clients increase investments in technology-enabled business transformation.
Details
Report Information
Report: Revenue Growth of Computer Software Industry Likely to Slow Down
Organisation: Centre for Monitoring Indian Economy
Division: Industry Outlook
Industry: Computer software and information-technology services
Outlook period: Second half of 2026–27
Related theme: Growing contribution of artificial-intelligence-related revenue.
Revenue-Growth Outlook
Expected trend: Revenue growth across the computer software industry is likely to moderate during the second half of the financial year.
Client spending: Customers are expected to remain cautious about discretionary technology expenditure because of uncertain business conditions and tighter budgets.
Deal conversion: The slow conversion of contract wins and order pipelines into recognised revenue is expected to constrain near-term performance.
Pricing pressure: Productivity improvements generated through AI may encourage clients to seek lower prices or expect more work to be completed within existing budgets.
Broad-based recovery: Differences in spending conditions across customer industries may prevent the sector from experiencing a uniform recovery.
Artificial-Intelligence Business
AI expansion: Information-technology companies are increasing their focus on artificial-intelligence services and solutions.
Revenue contribution: Income generated through AI-related projects is expected to gain traction as adoption expands.
Transformation projects: Companies are securing contracts that use AI, automation, cloud platforms and data technologies to transform client operations.
Productivity benefits: AI can help service providers automate repetitive activities, improve delivery speed and increase employee productivity.
Commercial challenge: Some productivity benefits may be transferred to customers through pricing reductions, potentially limiting the revenue gained from greater operational efficiency.
Traditional Software Services
Continuing weakness: Demand for traditional software-development and information-technology services is expected to remain comparatively subdued.
Discretionary projects: Clients may continue to postpone or reduce projects that are not considered essential to immediate business operations.
Legacy services: Conventional service lines may face slower demand as clients redirect a portion of their technology budgets towards AI-enabled transformation.
Uneven sectoral demand: Technology spending is likely to vary across banking, manufacturing, retail, healthcare and other customer industries.
Revenue mix: Industry performance will increasingly depend on whether growth in AI and transformation services can compensate for weakness in established service categories.
Business Implications
Execution priority: Software companies will need to improve the speed at which secured projects move from contract signing to implementation and revenue generation.
Capability development: Investment in AI expertise, data engineering, cloud infrastructure and industry-specific solutions may become increasingly important.
Pricing strategy: Providers may need to develop commercial models that capture a fair share of the value created through AI-led productivity.
Demand monitoring: Companies will need to monitor variations in technology spending across regions, industries and individual clients.
Near-term outlook: Growth may remain restrained until client confidence improves and a larger proportion of contract wins begins contributing to reported revenue.
Further information: Readers may access the complete analytical report and the accompanying assessment of AI-related revenue through the links provided in the original CMIE Industry Outlook communication.
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