Trump’s backing away from tariffs diminishes chances of recession, boosts tech services, says Everest Group founder

Trump administration's tariff decisions impact tech services market, with potential recession risk and AI challenges looming, says Everest Group founder.

The Trump administration’s ‘backing away from tariffs quickly’‘ would diminish the chances of a recession in the U.S and this in turn would give a boost to the global tech services market comprising key systems integrators such as TCS, Infosys, Wipro, HCLTech, said Peter Bendor-Samuel, founder and executive chairman, Everest Group.

‘’There has been a lot of uncertainty in the United States and this has slowed demand for technology. But, it now appears that the Trump administration is backing away from tariffs quickly and the chances of a recession that materially affects the tech services market has diminished,’‘ Everest Group Founder told The Hindu.

He said the U.S. has been showing a fair amount of resilience now, plus there was a significant amount of pent-up demand waiting to be unleashed which has been postponed by the tariff uncertainty. “However, I see this demand is likely to emerge in the next quarter onwards,” indicating a healthy second half of FY26 for Indian tech providers.

Mr. Bendor-Samuel further said all tech services firms were having a tough time with AI deals with the exception of smaller, specialised firms which appear to be gaining traction.

According to him, the challenges for the Indian firms are twofold. The first is that most of their clients have not adopted AI in a significant way and are still working on pilots. The second is that when AI is applied to the coding function it creates significant cannibalisation (internal competition between new and old products and services of a company which could adversely impact sales/revenues) and business model issues which are difficult with firms that are currently dependent on offshore or Indian-based production.

On the most pressing issues encountered by the IT industry currently, the global analyst commented, ‘‘The uncertainty created by the Trump tariffs and the corresponding delay in spending on discretionary spending is by far the most pressing issue in all tech services markets at this time.’‘

Lurking behind this were the changes that AI would bring and the likely challenge to the industry operating model, although the latter would not emerge until the tariff questions are answered, observed Mr. Bendor-Samuel.