India-US trade deal brings relief for domestic IT services players

India-US trade deal eases fears of tariff spillover into IT services, offering relief to Indian tech firms amid weak global demand and delayed client spending

The India-US trade deal has offered a much-needed breather for the Indian information technology (IT) industry, which has been grappling with global macroeconomic uncertainty and subdued client spending over the past few years.

 

Industry analysts say the agreement has eased fears that IT services could be drawn into a broader trade conflict, providing clarity that offshore delivery models remain intact.

 

Gaurav Parab, principal research analyst at NelsonHall, said that since the tariff announcements, the US administration had deployed a range of negotiating levers, with trading partners responding with their own measures, creating uncertainty over what tools could eventually be used.

   

“The agreement signals that IT services are not, at least for now, being drawn into the tariff crossfire and that the offshore delivery model remains intact. This clarity has provided the market with much-needed breathing space, which explains the immediate positive reaction,” Parab said.

 

Many also believe the deal will help US clients — the largest market for Indian IT services — improve their decision-making cycles. Large deals had been delayed, largely due to tariff uncertainty and the surge in artificial intelligence (AI) adoption.

 

That sentiment was reflected in the stock market on Tuesday, a day after the deal was announced, with IT stocks posting sharp gains as investors bet on an improvement in the sector’s outlook. Midcap companies outperformed largecaps, given their higher exposure to the US market. Persistent Systems saw the biggest intraday gain of 8 per cent, followed by Wipro with 7.4 per cent, Tata Consultancy Services at 5.2 per cent, and Hexaware and LTIMindtree rising 4.8 per cent.

 

Industry body Nasscom said that while technology services were not directly impacted by tariffs, the deal would help reshape the India-US trade narrative and support investments across both markets.

 

“The agreement reinforces the strategic partnership between the two countries and will help create a more stable environment for technology-led growth," Nasscom said in a statement.

 

The sector has been under pressure for several quarters due to geopolitical tensions, high inflation, and weak technology spending, which have weighed on revenue growth and margins. At the same time, the rise of AI has altered workflows and deal structures, with clients demanding higher productivity and efficiency within existing budgets, while expecting AI-led gains to be passed on to them.

 

BNP Paribas expects a recovery in Indian earnings growth across key sectors, including IT services. “In January 2026, India concluded trade deals with both the European Union and the US, its two largest export markets. We expect foreign portfolio investor-heavy sectors such as financials and IT services to benefit from a return of foreign portfolio investor inflows, largely through valuation multiple expansion. For IT services, the outlook is improving at the margin,” Kunal Vora, head of India equity research at BNP Paribas, wrote in a note.

 

While analysts caution that the deal does not materially change fundamentals for the sector, they agree it removes a significant overhang on sentiment. There had been concerns that tools such as digital services taxes or indirect sourcing disincentives could emerge, despite the deep interlinkages in global delivery models.

 

Many also said the deal will provide clarity for global capability centre (GCC) players, who had slowed down their expansion plans.

 

Though Gaurav Vasu, founder and chief executive officer of UnearthInsights, says tariffs never impacted the setting up of GCCs in India. “If it did, we would never have had 101 new GCCs last year, which was way more than 2024.”

 

India has about 1,760 GCCs, according to Nasscom data, with an increasing focus on high-value services and engineering research and development. That number is expected to reach 3,000. More than 500 centres now have AI capabilities and a holistic global AI charter, up from 210 in 2023. While many current GCCs are extensions of Fortune 500 companies, the next wave is expected from Forbes 2000 firms — smaller, cost-sensitive companies for whom Tier-II and Tier-III cities are ideal locations.