New Delhi, June 28 -- The India IT sector is facing an uncertain demand environment from an unprecedented confluence of technology and business cycle headwinds from GenAI-led deflation and geopolitics, JPMorgan said in a research report. The brokerage warned that a meaningful recovery in industry growth remains distant as enterprises grapple with shifting tech priorities and budget constraints.

The brokerage said the IT services industry "has been stuck at 2-3% revenue growth over the last three years" and, with "AI deflation still only in Year 2," it sees "further headwinds to growth over the next two years." In light of uncertainty around the timing of a positive inflection, JPMorgan has moderated its medium- to long-term growth estima...