Indian IT stocks witnessed a sharp selloff on Friday morning after global consulting and technology giant Accenture issued a cautious outlook, triggering fears that demand across the technology services sector remains weaker than expected.
The negative sentiment spread rapidly across Dalal Street, dragging the entire IT pack lower and erasing nearly Rs 2 lakh crore in investor wealth within minutes of trading. The selloff came after Accenture lowered the upper end of its annual revenue growth forecast and warned that clients continue to remain cautious about technology spending despite increasing interest in artificial intelligence (AI).
IT Heavyweights Lead Market Decline
Leading technology stocks bore the brunt of the selling pressure as investors rushed to reassess growth expectations for the sector.
Shares of Tata Consultancy Services (TCS), Infosys, HCLTech, Tech Mahindra and Wipro fell between 3.3 per cent and 6 per cent during early trade. The weakness extended beyond large-cap names, with mid-sized IT companies also facing significant losses.
Coforge, Hexaware Technologies, Sonata Software, Tata Elxsi and KPIT Technologies were among the major losers, reflecting widespread concerns about the future demand outlook for software and digital transformation services.
The magnitude of the decline was evident in the broader market, with all 15 top losers on the Nifty 500 index during morning trade belonging to the IT sector.
Nearly Rs 2 Lakh Crore Investor Wealth Eroded
The selloff had an immediate impact on market capitalisation.
The combined valuation of Sensex-listed companies fell from Rs 4,77,60,908 crore to Rs 4,75,65,708 crore, resulting in a loss of approximately Rs 2 lakh crore in investor wealth shortly after markets opened.
The sharp correction highlighted growing investor concerns that if Accenture is witnessing slower demand and weaker deal activity, Indian IT companies could face similar headwinds in upcoming quarters.
What Triggered The IT Stock Rout?
While Accenture’s third-quarter results were not particularly weak, investors focused more on the company’s future outlook.
The company reported revenue of $18.72 billion for the quarter, representing a 6 per cent year-on-year increase. However, management narrowed its full-year revenue growth guidance to 3-4 per cent from the earlier forecast range of 3-5 per cent.
More importantly, Accenture indicated that clients are not significantly increasing overall technology budgets despite the rapid growth of AI-related initiatives.
Instead, companies are reallocating existing technology budgets towards AI projects rather than creating additional spending opportunities. This has raised concerns that the AI boom may not immediately translate into stronger revenue growth for technology service providers.
Accenture also projected fourth-quarter revenue below Wall Street expectations and revealed that geopolitical tensions in the Middle East negatively impacted its business by approximately $400 million during the quarter.
Weak Outsourcing Demand Raises Fresh Concerns
One of the most closely watched indicators for Indian IT companies was Accenture’s outsourcing bookings performance.
The company reported a 15 per cent decline in outsourcing bookings compared to the same period last year. Since outsourcing remains a key revenue driver for India’s software services industry, the decline has raised concerns about future deal flows and revenue growth.
The data suggests that global enterprises remain cautious about signing large technology contracts amid ongoing economic uncertainty. Consulting demand continues to remain weak, while discretionary technology spending has yet to witness a meaningful recovery.
Abhishek Bhilwaria, Partner at BhilwariaFinserv, said the decline in Accenture’s bookings points to a broader challenge facing Indian technology companies.
According to him, global clients are continuing to reduce traditional technology spending, and Indian IT firms may need to accelerate their transition towards AI-led transformation projects and specialised services to sustain growth and profitability.
Global Technology Stocks Also Under Pressure
The negative reaction was not limited to Indian markets.
On Wall Street, Accenture shares plunged nearly 15 per cent after the earnings announcement, marking one of the sharpest declines in recent years.
The weakness spilled over to other technology stocks globally:
- Infosys ADRs fell as much as 10 per cent
- Wipro ADRs dropped more than 7 per cent
- Cognizant declined over 10 per cent
- IBM lost more than 5 per cent
- French IT services company Capgemini fell nearly 9 per cent
The widespread selling reflected growing concerns that enterprise technology spending remains under pressure despite enthusiasm surrounding generative AI.
Brokerages Turn Increasingly Cautious
Several brokerage firms interpreted Accenture’s results as a warning sign for Indian IT companies.
Citi
Citi noted that although Accenture’s trailing 12-month bookings remain 5 per cent higher year-on-year, it remains cautious on the Indian IT sector. The brokerage highlighted that the Nifty IT index is trading at around 16 times estimated FY27 earnings, leaving limited room for disappointment if growth remains weak.
HSBC
HSBC described Accenture’s guidance cut as a negative read-through for Indian IT firms. However, it believes the weakness is more closely linked to geopolitical disruptions in West Asia rather than AI-driven productivity concerns.
Nomura
Nomura warned that geopolitical uncertainties could continue affecting technology spending and deal activity through the first quarter of FY27 and potentially beyond. The brokerage prefers Infosys and Cognizant among large-cap names while maintaining a positive view on Coforge and eClerx in the mid-cap segment.
Jefferies
Jefferies adopted one of the most cautious stances, warning that another guidance downgrade from Accenture raises the risk of earnings estimate cuts for Indian IT companies.
The brokerage also cautioned that investors may increasingly question long-term growth prospects and valuation multiples across the sector. Despite the Nifty IT index already correcting around 25 per cent this year, Jefferies continues to maintain an underweight rating on the sector.
AI Growth Story Intact, But Monetisation Delayed
Despite the market reaction, Accenture management struck a relatively optimistic tone on artificial intelligence.
Chief Executive Julie Sweet said demand for large-scale transformation projects remains healthy and AI-related engagements continue to grow faster than the company’s overall business.
The company also plans to spend $9 billion on acquisitions this year to strengthen its capabilities in AI, cloud computing, cybersecurity and data services.
However, investors remain focused on one key concern: while AI adoption is accelerating, the expected revenue benefits are taking longer to materialise.
Until global enterprises begin expanding technology budgets rather than simply reallocating existing spending, Indian IT companies may continue to face pressure from weak outsourcing demand, cautious client spending and an uncertain global economic environment.