TLDR: The Indian IT sector experienced a mixed second quarter in 2025, with macroeconomic headwinds and client caution leading to modest growth. Generative AI emerged as a significant factor, exerting a deflationary impact on certain services, while simultaneously driving demand for new AI-centric skills and roles across the industry.
The Indian IT services sector faced a challenging second quarter in 2025, with companies anticipating modest results primarily due to prevailing macroeconomic uncertainties and cautious client spending. While Q2 is traditionally a strong period, Investec predicts divergent performances among IT majors. Tier-I firms like Infosys and HCLTech are expected to show slight growth, with Infosys projected to lead at 2% quarter-on-quarter growth, followed by HCLTech at 1.7%. TCS and Wipro are forecast to report around 0.2% growth each. Mid-tier companies, however, are poised to outperform, with Kotak Institutional Equities projecting Coforge to lead with 6% growth, and Persistent Systems at 4%. Motilal Oswal Financial Services echoes these trends, highlighting Coforge at 6%, Persistent at 3.7%, and Hexaware at 3.3% as strong performers, bolstered by large cost-saving and consolidation deals.
A significant factor influencing these uneven results is the growing impact of Artificial Intelligence, particularly Generative AI (GenAI). Analysts caution that while rupee depreciation supports margins, pricing pressures, wage costs, and the ‘deflationary impact’ of GenAI will limit overall gains. Kotak notes that GenAI is ‘currently deflationary to the extent of 2-3%, especially in coding, summarisation, and contact-centre BPO,’ though its long-term effect on IT budgets remains uncertain.
Beyond immediate financial impacts, AI is fundamentally reshaping the Indian IT workforce and skill requirements. LinkedIn research, as reported by Analytics India Magazine, reveals that 64% of job-related skills are expected to change by 2030. A staggering 95% of Indian C-suite leaders are prioritizing AI proficiency over traditional experience, indicating a significant shift in hiring paradigms. AI literacy is rapidly becoming an essential competency across all industries, with a high demand for skills such as large language models (LLMs) and prompt engineering, particularly for tech roles in India.
Malai Lakshmanan, Head of India Engineering at LinkedIn, emphasized that foundational engineering strengths like software design and code review remain crucial alongside new-age AI capabilities. Professionals who can combine these diverse strengths are expected to be best prepared for the ‘agentic AI future.’ As AI automates routine tasks, human-centric skills like creativity, innovation, problem-solving, and strategic thinking are gaining immense value across various sectors, including marketing, design, business development, and education. Customer engagement is also seeing increased focus as companies strive to build brand loyalty.
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Nirajita Banerjee, LinkedIn’s Senior Managing Editor for India, advises professionals to proactively assess and highlight their soft skills on their LinkedIn profiles and pursue continuous learning through online courses or practical assignments. The platform’s data suggests that individuals listing five or more skills on their profiles receive significantly higher engagement from recruiters. The emergence of roles like ‘AI Engineer,’ responsible for designing and training AI models, further underscores the technology’s transformative influence on the job market.
