Infosys has lowered its revenue growth forecast for the 2026-27 financial year as weak demand in North America, pricing pressure and a shift towards artificial intelligence (AI) spending weigh on India's information technology services sector.

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The Bengaluru-based IT company revised its fiscal 2027 revenue growth guidance to 1%-2%, down from its earlier forecast of 1.5%-3%. The revision highlights the challenges traditional IT service providers face as clients redirect technology budgets towards AI and seek greater productivity at lower costs.

Revenue from North America, which accounts for more than half of Infosys' sales, declined 1.5% in the second quarter, marking its weakest performance in two years. The company said reduced projects among technology and retail clients in the region affected its performance.

Infosys' overall revenue rose 10.7% year-on-year to ₹49,244 crore, slightly exceeding analysts' expectations. Excluding currency movements, revenue increased 1.5%. Net profit grew 6.2% to ₹7,823 crore but fell short of market estimates.

The company also reported a rise in large deal wins, which reached $5.2 billion, compared with $3.1 billion in the same quarter a year earlier.

The wider IT services industry is undergoing a shift as businesses invest in AI, cloud computing and automation. While these technologies create new opportunities, clients are increasingly demanding measurable outcomes and lower costs, putting pressure on traditional billing models based on employee hours.

Infosys management cited softer quarterly performance, competitive intensity and demands to pass on AI-driven productivity gains as factors behind the revised outlook. The changing spending environment could continue to challenge traditional IT providers as businesses reassess their technology investments.