The report forecasts that the revenue growth for Tier 1 IT companies will range from a decline of 0.8% to a rise of 3.3% quarter-on-quarter (QoQ) in USD terms. Specifically, TCS is expected to see a decrease of 0.8%, Infosys may remain flat, while HCL Tech is projected to see the highest growth among the Tier 1 companies at 3.3%. On the other hand, Wipro and Tech Mahindra are anticipated to experience a decline in their revenues by 1.5% and 0.4%, respectively.

Tier 2 companies are expected to fare slightly better, with revenue growth ranging from 0.1% to 3.8% QoQ in USD terms. Among the Tier 2 players, Coforge stands out as one of the top performers, likely to report solid revenue growth, reflecting strong operational execution.

Despite the modest revenue expectations, operating margins for both Tier 1 and Tier 2 companies are anticipated to see a slight improvement. However, companies will continue to face challenges, including wage hikes and evolving client demands. Insights from management teams on demand trends, revenue guidance, and hiring strategies will be critical for understanding the sector’s future trajectory.

The report highlights that IT companies are focusing on improving operating margins by implementing measures such as reducing subcontracting costs, enhancing the employee pyramid, and managing wage hikes.

While the broader sector continues its recovery from a downturn, there are positive signals from certain sectors. Demand for IT services is showing signs of gradual improvement, especially in key verticals like Banking, Financial Services, and Insurance (BFSI), along with Technology, Media, and Telecom (TMT). The Manufacturing and Healthcare sectors are also displaying resilience, contributing to steady growth across the industry.

A noteworthy development is the anticipated positive trend in the conversion of Total Contract Value (TCV) to revenue, bolstered by a ramp-up in new deals and reduced deal slippages when compared to FY24.

Furthermore, IT firms are increasingly focusing on improving utilization rates, productivity, and stabilizing employee attrition. The sector is also benefiting from a more balanced offshore revenue mix, which has returned to stability after the pandemic disruptions.

Looking forward, the report points out the promising opportunities in generative AI solutions, which are expected to be a significant driver of incremental business growth in the medium term. As the IT services sector continues to recover, a strong emphasis on operational excellence will likely help sustain its gradual upward trajectory.

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Ganesh Gopalan, Co-Founder and CEO of Gnani.ai, shared his insights, saying, “2024 marked a pivotal year for generative AI, transforming industries from customer service to creative innovations. In 2025, the widespread adoption of Small Language Models (SLMs) and Speech-to-Speech Large Language Models (LLMs) will revolutionize sectors like customer support, healthcare, BFSI, automotive, and telecom.” These advanced AI technologies are expected to deliver highly accurate, low-latency solutions tailored to niche linguistic requirements. SLMs will provide unmatched precision for specialized tasks, while Speech-to-Speech LLMs will facilitate real-time multilingual communication, enhancing the global interconnectedness of services.

Another major development will be the rise of Agentic AI, which autonomously learns and adapts to its environment, empowering businesses with proactive decision-making capabilities. “As these models evolve, they will reshape generative AI, ushering in a new era of intuitive, efficient, and personalized global interactions,” Gopalan added.

In the education sector, AI is expected to drive significant advancements. Dr. Sanjay Gupta, Vice-Chancellor of World University of Design, emphasized, “AI, VR, and AR have opened new frontiers, redefining education for the modern era. We anticipate continued growth in the demand for high-quality design education, driven by global trends and the need for creative, adaptable thinkers.” AI will not only transform how we learn but also help bridge the gaps in traditional educational pathways. Dr. Yajulu Medury, Vice Chancellor of Mahindra University, noted that AI platforms will allow for more personalized learning experiences, helping students reach their full potential. The integration of AR and VR will further enhance these immersive learning environments in the coming year.

Robotics will also see a revolution through AI. Puru Rastogi, Co-Founder and CEO of Mowito, explained, “AI and robotics technologies will set new benchmarks, enabling real-time decision-making, predictive maintenance, and smarter robots. AI-driven automation will propel scalable growth and industrial prosperity. The future is clear—2025 will bring about a new era of agility and innovation.” These advancements will make robots smarter and more efficient, leading to better automation in industries across the board.

As technology becomes more intelligent, chipsets will play an increasingly critical role. Anku Jain, Managing Director of MediaTek India, pointed out, “Agentic AI, generative AI, advanced LLMs, and cloud computing have already triggered a tectonic shift in the industry.” The demand for powerful chipsets will continue to grow, supporting the heavy computational requirements of AI technologies.

AI’s influence is already transforming everyday life, from digital payments to how we search for information. Matthew Foxton, India Regional President & Executive Vice-President of Branding & Communications at IDEMIA Group, said, “In 2025, cryptography, tokenization, and biometric authentication will further drive innovation, particularly with the rise of embedded payments, connected devices, and hyper-connectivity, especially in the automotive sector. These technologies will create smarter, faster, and more secure transaction ecosystems.”

As we move into 2025, AI will undoubtedly play a central role in reshaping industries, societies, and even our daily routines. From the devices we use to the jobs we perform, AI will continue to influence and redefine how we interact with the world. The future is here, and it’s powered by artificial intelligence.

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