IT sector to experience slowdown in discretionary spending, say analysts

Motilal Oswal Financial Services in its report said Accenture results reinforce the cautious sentiment around discretionary spending in IT services, which remains constrained, particularly for smaller deals.

 “The expectation that discretionary spending would revive in areas like US banking, healthcare, and Hi-Tech due to factors such as rate cuts, a business-friendly administration, and pre-GenAI spending has not fully materialised, as the landscape over the past six months has shifted — US rate cuts appear less imminent, and geopolitical/tariff risks have introduced new uncertainties for enterprises in the US and Europe,” it said.

 Somdutta Singh, serial entrepreneur, founder and CEO Assiduus Global pointed out that while short-term spending is clearly under pressure, this period is also prompting a reset in how companies evaluate ROI on digital transformation.