IT companies tighten belt as AI, macro headwinds squeeze biz margins

India’s leading IT companies are facing the double whammy of persistent macro headwinds and AI-led productivity impact, squeezing margins.

The fiscal first quarter showed companies are stretching all internal levers aggressively to protect profits amid slowing large-deal momentum. This includes lowering sales and admin costs, delaying pay hikes, and rejigging bench policies.

Analysts expect the trend to continue through the fiscal second half as the IT sector is turning into a “negotiator’s market”. While revenues may see an uptick due to…