I don't track IT companies and never invested in one and maybe never will as I don't understand them much (although may explore product companies). But I FEEL the below.
Indian IT companies always worked on cost arbitrage model and were never innovators. As a result of which they are/might feel a big pinch when their end customers reduce the business.
End customers themselves are reducing IT budgets bigtime and concentrating mostly on necessary/mandatory kind of stuff for e.g. deliveries/programs related to regulatory stuff. Global financial institutions (FIs) (especially European ones) are facing a scenario of reducing margins and closing down non-profitable (and/or business with very thin margins). As these businesses are also accountable to shareholders and therefore to show profits they are reducing their operational costs and IT budgets become easy target in such a scenario. Add to it the additional (and increasing) capital requirements that these global FIs have to provide for (driven by regulatory actions to do the same) in the aftermath of the 2008 financial crisis.
There is competition amongst IT players too as a result of business coming down because of which they are (or might be) outbidding each other to get projects or foothold in client's business. This I think will first impact the likes of IBM and Accenture's of the world if Indian IT companies can carry out the same activities. But in any case margins are falling in the biddings.
Emphasis on moving to other low cost onsite locations - for e.g. in Europe other low cost IT destinations like Dublin and Poland are coming up and in future other low cost locations in Spain and other East European countries might also come up as the clients want to move out of high cost locations like London and only want to support very important and high touch processes from costly locations.
Increase in offshoring. Lot of processes being offshored (resulting in lower margins again) and again captives of these global FIs also expanding in India as in relative terms it is still much cheaper for them to hire a resource in India rather than pay for a vendor resource at onsite.
On the point of Indian IT companies not being innovators - The fintech and technological disruptions like Blockchain etc. have the potential to wipe out entire back office of these global FIs. Lot of automation too going on, on top of these disruptions etc. This will also impact Indian IT companies as if back offices of these global FIs itself are getting wiped out then why would they need Indian IT companies for support or they will need much lesser number of resources.
Fintech and technology disruptions infact I think may create opportunities for Indian product companies. Lot of global FIs work on many legacy systems. To stay relevant in the current age of disruption these FIs will need to move from these legacy systems to newer products/systems/platforms, which may create better opportunities for product companies.
It is difficult for Indian IT (service oriented) companies to adapt to these changes as they have developed a certain way of working and are kind of too big to adapt. They might go for niche acquisitions in the fintech space or acquire innovators (but again there will be healthy competition for acquisitions here too and MNCs are closer to most of the disruptors/start-ups/niche companies as such companies are mostly in the west; add to it if these disruptors etc. would want to sell out as they already have good access to capital). They will need to adapt to survive and stay relevant which will not be easy.
So lot of headwinds and uncertainty I think for traditional Indian IT companies. Companies that will evolve may come on the right side of this phase.
Just few thoughts that come to mind.