Four of five top IT firms saw BFSI share rise in FY26. Underlying drivers mix genuine AI demand and shrinkage in other verticals. Q1 FY27 earnings will confirm the trend.
Four of India's five largest IT services firms reported a higher share of revenue from the Banking, Financial Services and Insurance (BFSI) vertical in FY26, reversing the prior year's decline. The data comes from the companies' annual reports for the fiscal year ending March 2025. The headline shift suggests a sector-level recovery in banking technology spending. The underlying mechanics, however, require separating genuine demand growth from a denominator effect caused by shrinking revenue in other verticals.
TCS saw BFSI revenue share climb to 32.0% from 30.9% in FY25, the largest gain among peers. HCLTech followed with an increase to 21.5% from 20.7%. Infosys inched up to 28.0% from 27.7%, while Tech Mahindra moved to 16.3% from 16.1%. Wipro was the exception, dropping to 34.1% from 34.3%.
In absolute terms, TCS, HCLTech, Infosys, and Tech Mahindra reported year-on-year BFSI revenue growth between 1% and 7.5%. Wipro posted a 0.7% decline. The spread matters because Wipro carries the highest BFSI concentration among the top five; its drop suggests either wallet-share loss or a slower recovery in discretionary spend.
| Company | FY25 BFSI Share | FY26 BFSI Share | Change (pp) | Absolute Y/Y Growth |
|---|---|---|---|---|
| TCS | 30.9% | 32.0% | +1.1 | +1% to +7.5% |
| HCLTech | 20.7% | 21.5% | +0.8 | +1% to +7.5% |
| Infosys | 27.7% | 28.0% | +0.3 | +1% to +7.5% |
| Tech Mahindra | 16.1% | 16.3% | +0.2 | +1% to +7.5% |
| Wipro | 34.3% | 34.1% | -0.2 | -0.7% |
Source: Company annual reports.
Pushpa Marwal, analyst at Forrester, made the point directly. "While BFSI share is going up, a part of it is being driven by other industries contracting or being flat. In such a scenario BFSI doesn't have to do much to look stronger." Marwal added that some of the gains are earned, some are simply a function of other verticals underperforming.
Key insight: When a vertical's share rises while other segments shrink, split the share change into a 'real demand' component (absolute revenue growth) and a 'mechanical' component (denominator contraction). The mechanical component gets no multiple credit from the market.
The contraction in technology, telecom, manufacturing, and retail during FY26 meant that even flat BFSI revenue would have increased its share. The real test is whether BFSI can grow absolute revenue at an accelerating pace when other verticals stabilise.
Marwal also flagged that current BFSI deals are more necessity-led backlog clearing from prior years. These have a ceiling when compared with larger transformation projects that carry bigger tickets and longer revenue tails. The implication: the recovery may plateau once the backlog is exhausted, unless banks shift to discretionary spending.
A report from Kotak Institutional Equities observed that many AI projects in banking are moving from the pilot stage into production environments. That shift supports the absolute growth in BFSI revenue. Vivek Iyer, Partner and Financial Services Risk Leader at Grant Thornton Bharat, linked the resilience to the nature of bank spending. "Unlike other verticals, banks and financial institutions are using AI and technology investments for core productivity gains rather than discretionary innovation spending, making the segment relatively resilient even during periods of macro stress."
K Krithivasan, Chief Executive Officer and Managing Director at TCS, told analysts on the Q4FY26 earnings call that BFSI clients continued to prioritise core and legacy modernisation alongside AI and GenAI investments, even with macroeconomic uncertainty causing cautious decision-making.
Kotak's report also warned that over the long run, AI could create revenue deflation as banks report productivity gains in application development and customer service, leading to lower billable effort for IT service players. The same technology driving today's modernisation contracts could erode the volume of work required in future cycles. Gaurav Vasu, co-founder of UnearthInsight, offered a contrasting stabiliser: since most BFSI spending is non-discretionary, the vertical is more resilient than others. That provides a floor but does not solve the long-term unit-economics problem.
Iyer added a tailwind specific to Indian IT: "In addition, the currency depreciation is also improving the cost competitiveness of Indian IT vendors, potentially supporting outsourcing demand from global BFSI clients through FY27." The rupee's weakness makes Indian services cheaper for dollar-denominated clients, which incrementally supports BFSI outsourcing demand.
Vasu reiterated that non-discretionary priorities make BFSI more resilient than other verticals. Banks cannot postpone core modernisation, regulatory compliance, or risk-management technology the way a retailer can delay a CRM upgrade. That gives BFSI a structural stability that other verticals lack, even if absolute growth rates are modest.
Infosys (INFY) carries an Alpha Score of 57 out of 100, labelled Moderate. The score incorporates earnings momentum, valuation, and technical factors. The FY26 BFSI share increase–even if partially mechanical–supports the earnings-momentum component in the near term. The risk of long-run revenue deflation from AI, however, caps the valuation multiple expansion that would otherwise follow a strong vertical recovery.
Indian IT valuation premiums have historically tracked BFSI revenue growth more closely than total revenue growth because BFSI contracts tend to be longer-term and more sticky. If the current BFSI uptick is 30%–40% mechanical (other verticals shrinking) and 60%–70% real backlog clearing, the multiple response may disappoint bulls who look at the share change alone. The watchlist question for FY27 is whether banks move from necessity-led deals to transformational projects–or whether AI deflation starts appearing in per-client revenue.
The Q1 FY27 earnings season in May and June will provide the first real read. Focus on the BFSI vertical commentary for the top five firms. If TCS and HCLTech maintain or grow absolute BFSI revenue while other verticals stabilise, the share increase will shift from mechanical to organic. If other verticals remain flat, the BFSI share story becomes a relative strength narrative–useful for pair trades, not for a sector-wide re-rating.
For a broader view on sector-level stock analysis, the Indian IT index will reflect how much of the BFSI uplift flows through to earnings forecasts. The current data says the recovery is real but partial, and the market has not yet priced in the AI deflation risk. That gap creates the information edge.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.