Accenture flagged that client budgets remain lukewarm despite higher AI spending, and that demand for its consultancy services remains weak.The Indian IT sector felt the aftershocks of a weaker global technology spending environment, with shares of major domestic IT services companies tumbling by as much as 8% on Friday (June 19).The sharp decline followed disappointing signals from global technology and consulting giant Accenture, which late on Thursday cut its revenue growth guidance for the current financial year and cautioned about a softer demand outlook in the months ahead.Accenture’s commentary is closely watched by investors as it is often seen as a bellwether for the global IT services industry. The company indicated that clients remain cautious on discretionary technology spending amid ongoing macroeconomic uncertainties, raising concerns about the pace of recovery in enterprise technology budgets. The subdued outlook sparked fears in the already battered Indian tech industry that demand conditions could remain challenging for outsourcing and digital transformation projects.The warning reverberated across Indian technology stocks — hit by the technology advancements in the AI segment — with investors rushing to reassess growth expectations for the sector.Accenture cuts guidanceThe Irish IT powerhouse cut its revenue guidance for the financial year ending August 2026 to between 3-4% from the previous forecast of 3-5% in constant currency terms. The company also flagged on its earnings call that client budgets remain lukewarm despite higher AI spending, and that demand for its consultancy services remains weak.Forecasts from global IT majors such as Accenture paint a picture for the future earnings performances for Indian IT majors, which often depend on a similar pipeline of US and Europe-based clients for a majority of their revenue. A weaker demand environment flagged by global IT majors would also mean weak earnings growth in the future for top Indian IT services players.Indian IT stocks fall up to 8%Subsequent to Accenture’s results, Indian IT services majors fell as much as 8% in early trade on Friday. At 12:35 PM, the Nifty IT was down 1,455.90 points or 5.1% at 27,010.55 and was the worst-performing sectoral index. Big names such as TCS, Infosys, Wipro, and HCL Tech were down 3-8%. Others such as Coforge and Persistent Systems also traded 2-5% lower. Infosys was down by nearly 8 per cent and TCS 6 per cent.Story continues below this adAlso Read | Fund managers play wait and watch on decline in IT stocks over AI pressure. What should you doThe BSE IT index was down by 4.93 per cent in the morning session. The fall in IT stocks pushed the overall market down, with the BSE’s Sensex index trading 756.97 points or 1% lower at 76,653.01. The National Stock Exchange’s Nifty 50 index was also down 0.9% at 23,960.“By nudging its constant-currency revenue growth guidance down to 3–4% (from 3–5%), and its core commercial guidance down to 4–5% (from 4–6%), Accenture has effectively confirmed that clients remain highly cautious with their wallets. Because Indian IT firms rely heavily on the same global pipeline for discretionary tech projects, this shift in Accenture’s forecast serves as a macroscopic warning for the entire sector, prompting investor’s selloffs,” said Shashwat Singh, fundamental analyst at Bajaj Broking.Analysts cautious on IT sectorPost Accenture’s earnings, global firm Citi said it remains cautious on the Indian IT sector, flagging that the Nifty IT trades at a significantly higher valuation (16 times its 1-year forward earnings) than Accenture (10 times its 1-year forward earnings), CNBC reported. “We have been cautious given AI disruption, increased competitive intensity, GCC trends, etc.; the macro uncertainty increases the challenges near term,” Citi said.Other firms also flagged near-term challenges for Indian IT services names. “We believe the Middle East conflict is expected to have some effect on the revenues and deal bookings in 1QFY27F. In our view, the indirect impacts can continue in 2QFY27F, as it is not clear how quickly spending behaviour will normalise, particularly in challenged sectors like automotive,” Nomura said.