The Analyst and The Forecast
Sandip Agarwal, a fund manager at Sowilo Investment Managers and a highly-ranked technology analyst, has become a prominent voice on the future of Indian IT. After a prolonged cautious stance on the sector, Agarwal has recently turned positive, citing
a structural shift. He predicts that the Indian IT sector will see earnings stabilize and begin to improve by the September 2026 quarter. He believes this will be driven by the adoption of enterprise-level Artificial Intelligence, leading to potential earnings upgrades and improved stock performance for IT companies within the next six months.
Decoding Enterprise AI
Unlike consumer-facing AI like chatbots or image generators, enterprise AI involves integrating artificial intelligence deep into a company's core processes. This includes everything from automating software development and testing to managing complex data platforms and enhancing cybersecurity. For Indian IT firms, this represents a major evolution. For decades, their business model was based on a simple equation: more engineers meant more billable hours and more revenue. Enterprise AI disrupts this by introducing automation that can handle tasks previously done by large teams. While this creates short-term pricing pressure, it also opens the door to higher-value consulting and integration projects.
From Hardware to Services
According to Agarwal, the initial phase of the AI boom was dominated by massive investments in hardware, like the powerful GPUs needed to train AI models. That phase has largely benefited hardware makers. Now, the cycle is shifting. Enterprises that have invested in the infrastructure are looking for partners to help them actually implement, manage, and scale AI solutions across their businesses. This is where Indian IT service providers come in. They are essential for integrating complex AI platforms with a company's existing legacy systems and large-scale workflows, positioning them as the key beneficiaries of this next wave.
Why the September Timeline?
Agarwal's September timeline is tied to the financial calendar and the flow of information in the market. He suggests that the sector will stabilize through the July-September quarter, with growth becoming more apparent afterward. This period corresponds with the reporting of quarterly earnings, which provide the clearest indication of industry health. Recent reports already show positive signs. For the June quarter, major firms like TCS and HCLTech reported that India was their fastest-growing geography, driven by domestic companies moving beyond AI experimentation into larger-scale technology spending. Agarwal believes that as these trends solidify, the negative sentiment that has recently impacted IT stocks will give way to a more positive outlook based on concrete results.
The Broader Industry Context
Agarwal's optimism, while notable, comes amid a mixed industry outlook. Some analyses, like a recent one from Crisil Ratings, project muted revenue growth for the current fiscal year due to weak discretionary spending and ongoing pricing pressure from AI-driven automation. However, other reports echo the long-term potential. India has emerged as a global leader in enterprise AI adoption, with 80% of organisations investing in the technology to drive revenue growth. The long-term opportunity is massive, with some estimates suggesting AI could create an incremental market of $300-400 billion for Indian IT services by 2030. The consensus is that while AI presents near-term challenges to the traditional billing model, it ultimately expands the overall market for technology services.
