Indian IT Sector in Trouble: Why the Worst Is Yet to Come for Infosys and Its Peers

In an interview with Republic Business, Prashant Sadarangani discussed why the downturn in the IT sector is far from over. He noted that the Nifty IT index has dropped by 25%, significantly lagging behind the broader market. Factors like Infosys' weak earnings, the loss of major contracts, and global uncertainty—including potential Trump-era tariffs—are adding pressure to the sector.

Sadarangani also raised concerns about valuations. While TCS and HCL Tech are trading at high price-to-earnings ratios, Infosys and Wipro seem undervalued but are grappling with sluggish growth. He referred to past downturns in 2008 and 2020, where the sector initially suffered but bounced back quickly thanks to cost-cutting measures, favorable currency movements, and a surge in digital transformation.

Still, he cautioned that investors hoping for a quick rebound may be let down, as the industry appears headed for a phase of extended consolidation and underperformance—despite strong long-term prospects in cloud computing.