With 60% of India’s oil imports sourced from the Middle East, higher crude prices could weaken US and European growth, forcing enterprises to cut discretionary technology budgets.
“Direct impact will be rising oil prices, slowing down revenues, impacting world GDP at large,” said Gaurav Vasu, CEO of UnearthInsight. Vasu expects global tech spending growth to moderate to 4-5% from 5-7%. “Global and Indian IT services could slow down to 2-3% for FY27,” he said, lower than previous projections of 4-5%, including M&A revenues. Subimal Bhattacharjee, tech policy analyst, said disruption in the region could affect delivery centres and ongoing mandates for companies such as TCS, Infosys, Wipro and HCLTech.
The latest blow comes as the nearly $300 billion IT service sector witnessed two stock routs earlier in February as AI tools from Anthropic threatened the future of the headcount-based services sector.
While the conflict could disrupt Gulf nearshore operations and delivery hubs, market watchers noted that if the situation is temporary, the impact on IT revenue is minimal. “Companies that have nearshoring efforts to cater to the European market are in Egypt and South Africa. Most delivery centres in Middle East are centred in UAE, with few hubs in Kuwait and Bahrain. These service the local companies more…so the immediate impact still seems minimal,” said Namratha Dharshan, chief business leader at Information Services Group.