New Delhi, Oct. 5 -- India's IT services sector is likely to see muted performance in the second quarter of FY27, but increasing traction in artificial intelligence-related deals could support growth over the medium term, Centrum said in a report.

The report said the demand environment has remained broadly unchanged over the past three months, with clients cautious about AI adoption and longer decision-making timelines weighing on near-term growth. At the same time, the brokerage expects deal booking to remain healthy, with a strong pipeline across most IT services companies.

"AI led deals to be significant drivers of incremental business growth in the medium term," the report said, pointing to the potential for the ongoing AI technolog...