India’s information technology sector is entering a pivotal phase of transformation as artificial intelligence reshapes the foundations of global digital services. Projected to grow 6.1% to US$ 315 billion in FY26, the industry is moving beyond its traditional services-led model toward AI-driven innovation, cloud modernisation, and orchestration-based enterprise solutions. This shift comes amid global uncertainty around automation and technology disruption, yet industry forecasts indicate that demand for digital transformation, intelligent systems, and platform integration remains robust.
At the heart of this transition is a structural realignment of capabilities and markets. Global Capability Centres are expanding their strategic roles, AI revenues are scaling rapidly, and more than 20 lakh professionals have already been trained in AI-related skills. With exports diversifying toward Asia-Pacific and the Middle East and domestic demand accelerating, 2026 is emerging not as a slowdown year, but as a reset moment—one that could define the trajectory of India’s IT industry in the AI era.
India’s IT sector may be facing turbulence amid global concerns over AI-led disruption, but industry projections suggest steady growth ahead. Amid fears of job losses and weakening global demand, the industry body, NASSCOM, has projected that India’s technology industry will grow 6.1% to reach US$ 315 billion in revenue in FY26 and is likely to maintain similar momentum in FY27. According to reports, this expansion will be driven by artificial intelligence-led services and increasing business from global capability centres (GCCs).
The industry body noted that global IT services are gaining momentum, supported by the easing of tariff pressures and improving trade conditions.
NASSCOM asserted that, despite mounting concerns around automation and AI-driven changes, the technology sector continues to create jobs on a net basis. The sector is expected to add 135,000 net new jobs in FY26, taking the total workforce (IT and GCC) to 5.95 million. It is projected to grow by a modest 2.3% in FY26. This compares with a net addition of 133,000 in the previous fiscal year, highlighting one of the slowest periods of hiring growth in recent years. In FY25, the workforce had already grown to 5.8 million from 5.67 million in FY24. It noted that campus hiring, however, has dropped considerably compared to earlier years.
The industry body also highlighted that over 20 lakh of the 59.5 lakh workforce have received AI training, including around 3 lakh employees equipped with advanced AI skills.
In its strategic review for the current fiscal year, NASSCOM estimated AI-driven revenues to be in the range of US$10–12 billion in FY26, adding that not all companies disclose their AI revenue figures. It has also revised its FY25 revenue estimate upward to US$ 297 billion, compared with the earlier projection of US$ 282.6 billion that was issued in February ahead of the fiscal year’s close.
The core IT services revenue is projected to rise to US$ 149 billion in FY26, up from US$ 143 billion in FY25. Business process management (BPM) revenue is expected to increase to US$ 59 billion from US$55 billion in the previous fiscal year, while software products revenue is likely to grow to US$ 23 billion in FY26 compared with US$ 21 billion in FY25.
Engineering, research and development (ER&D) revenues are projected to increase to US$ 63 billion from US$59 billion, while hardware segment revenues are expected to rise to US$ 21 billion from US$19 billion in the previous fiscal year.
Leading IT services firms such as Tata Consultancy Services, Infosys, and HCLTech have indicated improved demand visibility for FY27, backed by strong deal bookings and a revival in discretionary spending.
Notably, Tata Consultancy Services has reported AI revenue of around US$ 1.8 billion on an annualised run rate. HCL Tech has indicated AI earnings of US$146 million, accounting for roughly 4% of its total revenue. Meanwhile, Infosys has stated that AI contributes about 5.5% of its revenue, translating to US$ 275 million.
These numbers reflect a clear progression from small-scale trials to large-scale AI integration across operations.
According to Nasscom, exports from the sector are projected to grow 5.6% year-on-year to US$ 246 billion in FY26, up from US$233 billion in the previous fiscal year. However, it noted that in a shift from earlier patterns—where the United States and North America typically led growth—the Asia-Pacific and Middle East regions are now emerging as faster-growing markets.
It addeed that revenues from the domestic market are also forecast to expand by 7.9% in FY26, significantly outpacing the global average growth rate.
From a sectoral standpoint, industries such as healthcare, travel, and transportation are witnessing accelerated expansion, particularly with the rapid rise of global capability centres (GCCs) across India.
According to NASSCOM, Global Capability Centres (GCCs) are poised to remain a central growth catalyst, with 53% advancing to the portfolio or transformation stage, 70% establishing clear AI roadmaps, and 83% making investments in generative AI.
However, investor sentiment remains cautious. On February 24, 2026, IT stocks fell nearly 5% intraday amid concerns about rapid AI advancements, including updates to Claude Code by Anthropic, and brokerage downgrades highlighting structural shifts in the industry’s business model.
Industry leaders have positioned 2026 as a pivotal year of reset for India’s technology sector, marking a move away from the traditional services- and delivery-led framework toward an orchestration-driven growth model.
Although IT services and SaaS revenues are currently experiencing pressure and margin compression, experts view this as part of a broader transformation rather than a structural slowdown. They emphasize that enterprises are unlikely to cut technology spending; instead, budgets are being reallocated toward AI-led innovation and digital transformation priorities. This shift is expected to enlarge the overall market potential as new applications and diverse business use cases continue to expand. While the current environment appears challenging and uncertain, industry voices describe it as a temporary transition phase, expressing confidence that stronger demand and a more sustainable expansion cycle could begin to take shape within the next 12 to 18 months.
India’s IT and BPM sector continues to be a major driver of economic growth and employment. In April 2025, hiring rose 16% year-on-year, fueled by the growing adoption of AI, cloud modernisation, and the expansion of Global Capability Centres (GCCs). The India AI Mission further strengthened the ecosystem by securing 38,000 GPUs—well above its original target of 10,000—significantly boosting computing capacity for researchers, startups, and enterprises developing advanced AI solutions.
At the same time, India’s digital landscape is expanding rapidly, with over 76 crore citizens now online, making it one of the world’s largest internet populations while maintaining some of the lowest access costs globally. Supported by the Digital India Programme, which has enhanced digital infrastructure and accessibility, along with increasing private sector innovation and widespread adoption of digital applications, the country is entering a new phase of its IT revolution.
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