Advantage India
Growing
Demand
*Strong growth in demand for export from new verticals.
*India’s Information Technology (IT) sector has grown substantially over the past decade, driving exports and employment. As per NASSCOM, industry revenue rose from US$ 167 billion (Rs. 10,42,915 crore) in FY18 to an estimated US$ 297 billion (Rs. 25,68,159 crore) in FY25, with exports at US$ 233 billion (Rs. 20,14,751 crore) in FY25..
*India’s IT ecosystem is set for strong growth, with emerging technologies expected to drive a 20% rise in new jobs in 2025. By 2025, the Indian software product industry is projected to hit Rs. 8,62,000 crore (US$ 100 billion) as companies seek to expand globally..
Global
Footprint
*Indian IT firms have delivery centres all across the world.
*The global software outsourcing sector is forecast to expand at a compound annual growth rate (CAGR) of 7.54% from 2023 to 2027. Notably, Asia is at the forefront with a growth rate of 9.16%. Amid this expansion, India holds approximately 17.58% of the global outsourcing market. India boasts the world's largest developer workforce, with over 5.4 million software engineers. Moreover, its universities produce more than 500,000 new graduates each year, ensuring a consistent influx of talent.
Competitive
Advantage
*India’s technology industry is on track to double its revenue to US$ 500 billion (Rs. 43,23,500 crore) by 2030.
*According to a Nasscom report, India's pool of cloud professionals across diverse industries is projected to more than double, rising from 608,000 in 2021 to 1.5 million by 2025.
*During his visit to Japan on August 29-30, 2025, Prime Minister Mr. Narendra Modi secured Rs. 5,96,564 crore (US$ 68 billion) in investment pledges and signed an economic security pact focused on semiconductors, critical minerals, and AI.
Policy
Support
*The Union Budget FY26 has sanctioned Rs. 2,000 crore (US$ 232 million) to accelerate AI adoption and infrastructure development.
*The Union Budget 2025-26 allocated Rs. 20,000 crore (US$ 2.31 billion) for R&D, AI, geospatial initiatives and Atal Tinkering Labs to strengthen the innovation ecosystem and support private-sector-led research.
*The 2025–26 Budget allocates Rs. 782 crore (US$ 88.90 million) for cybersecurity measures to protect digital public infrastructure.
Introduction
The IT & BPM sector has become one of the strongest pillars of India’s economy, contributing significantly to growth, employment, and public welfare. In April 2025, the industry recorded 16% YoY growth in hiring, driven by the rising adoption of artificial intelligence, cloud modernisation, and the expansion of Global Capability Centres (GCCs). The IndiaAI Mission receives an allocation of more than Rs. 10,300 crore (US$ 1.19 billion) over five years, supported by the deployment of 38,000 GPUs. The tech and AI ecosystem employs 6 million people.
With over 76 crore citizens now connected to the internet, India is home to one of the world’s largest online populations while offering some of the lowest access costs. This has been supported by the Digital India Programme, which has expanded digital infrastructure and improved accessibility across the country. Together with growing private sector innovation and widespread adoption of digital applications, India is entering the next phase of its IT revolution. Reflecting this shift, India’s rankings improved seven places to the 38th position in the 2024 edition of the Global Innovation Index (GII), highlighting its rising global competitiveness in technology and innovation. India’s Global Capability Centre workforce is projected to rise to 3.46 million by 2030, supported by rapid adoption of artificial intelligence across roles.
Market Size
As per NASSCOM, India’s IT industry revenue has expanded from US$ 181 billion in FY19, including US$ 136 billion in exports, to an estimated US$ 297 billion in FY25, with exports contributing US$ 233 billion. India’s IT exports rose 16.50% in FY25 to US$ 233 billion from US$ 200 billion in FY24, with STPI-registered units contributing Rs. 10.64 lakh crore (US$ 123.05 billion), according to MeitY citing Nasscom. Export of IT services remained the largest contributor, accounting for more than 65% of total IT exports. In FY25, India’s top five software services export destinations were the United States (US$ 117.43 billion, 50.33%), Europe (US$ 73.26 billion, 31.40%) including the United Kingdom (US$ 34.41 billion, 15,.50%), Asia (US$ 12.21 billion, 5.23%), Australia & New Zealand (US$ 5.33 billion, 2.28%) and Canada (US$ 2.88 billion, 1.23%). Asia, Australia & New Zealand, and Canada together accounted for about 8.75%. Within the export mix, BPM, engineering and R&D (ER&D), and software products contributed 26% and 8% respectively in FY25.
India’s IT growth is being increasingly driven by new hubs beyond traditional metros. Non-metro cities such as Udaipur, Vizag, Coimbatore, and Nagpur recorded over 50% IT hiring growth in H1 2025, significantly higher than Bengaluru and NCR at 12–15%. This reflects a structural shift as tier-II and tier-III hubs attract demand in AI, cloud, and cybersecurity while offering cost savings of around 30%. Mid-tier IT companies also reported stronger growth than their larger counterparts in FY25, highlighting their agility in navigating uncertain global conditions, although sustaining this momentum in FY26 remains a challenge. The domestic market is also expanding steadily. India’s domestic IT & Business Services market reached US$ 64 billion in 2025, growing 18.52% YoY, with IT Services alone accounting for 71.17% of the market.
India’s IT spending is expected to reach US$ 176.3 billion (RS. 15,50,734 crore) in 2026, driven by a boom in data-centre expansion and AI-enabled software investments. Indian software product industry is projected to reach US$ 100 billion by 2025 as companies expand globally and strengthen delivery centres. The system infrastructure software market is forecast to reach US$ 20.8 billion by 2030, growing at a CAGR of 9.2% between 2023 and 2030. In parallel, the data annotation market, valued at US$ 250 million in FY20, is expected to surge to US$ 7 billion by 2030, driven by accelerated domestic demand for AI, even though the US continues to account for the bulk of current demand.
India has emerged as a leading global data-centre market, with Mumbai offering the second-lowest construction cost worldwide at Rs. 589 (US$ 6.64) per watt and benefiting from low power tariffs. India’s data‑centre capacity is projected to double by 2027 and could increase five‑fold by 2030, driven by strong demand for cloud and AI infrastructure. India's data center market is poised for significant expansion, with its value projected to more than double from US$ 10 billion in 2025 to US$ 22 billion by 2030.
India's DeepTech sector is forecast to expand 2.5-fold over the next five years, attaining US$ 27 to US$ 33 billion by 2030, driven by advancements in defence innovation and humanoid applications.
India’s AI adoption is growing at a record pace, with momentum having tripled YoY according to OpenAI.
To further support the ecosystem, the government has partnered with Paytm (One97 Communications Ltd), under which the company will provide mentorship, infrastructure support, market access, and funding opportunities to startups. Looking ahead, India’s IT industry is likely to reach US$ 350 billion by 2026, contributing nearly 10% to the nation’s GDP, according to Infomerics Ratings. Increased adoption of cloud technology alone could generate 14 million jobs and add Rs. 33,01,060 crore (US$ 380 billion) to GDP by 2026, underscoring the sector’s critical role in shaping India’s digital and economic future.
Investments/ Developments
Indian IT's core competencies and strengths have attracted significant investment from major countries and companies.
- Google announced US$ 15 billion investment over 2026-2030 for an AI Hub and data center in Visakhapatnam, marking its largest commitment in India to advance AI capabilities and services.
- According to a Nasscom report, India's pool of cloud professionals across diverse industries is projected to more than double, rising from 608,000 in 2021 to 1.5 million by 2025.
- India is set to invest US$ 200 billion in AI infrastructure. OpenAI has partnered with the Tata Group to develop 100 megawatts of AI capacity, with ambitions to expand to 1 gigawatt.
- Adani announced a plan to invest US$ 100 billion in AI data centers over the next decade, linking data-center buildout with AI infrastructure and renewable energy.
- In 2025, the IT and ITeS sector led investments with a total of US$ 13.1 billion, spearheaded by General Atlantic's US$ 600 million infusion into consumer fintech firm PhonePe. This was closely followed by US$ 450 million raised by quick-commerce leader Zepto, anchored by the California Public Employees' Retirement System (CalPERS) and supported by existing investors via a blend of primary and secondary transactions. Securing third place was Kedaara Capital's US$ 350 million investment in Impetus Technologies, a provider of data analytics and enterprise AI solutions.
- Micron Technology has inaugurated India’s inaugural semiconductor ATMP facility, backed by a US$ 2.75 billion investment, to advance assembly, testing, and R&D for AI-enabling chips.
- In November 2025, ESTIC 2025 announced a Rs. 1,00,000 crore (US$ 11.56 billion) scheme to boost private‑sector research, development and innovation in India.
- Announced in November 2025, TCS will invest Rs. 57,701 crore (US$ 6.5 billion) to build long‑term digital and AI infrastructure, signalling a move to boost India’s technological self‑reliance.
- Reliance Industries will invest Rs. 98,000 crore (US$ 11.41 billion) to build a 1 GW AI data-centre in Andhra Pradesh, scheduled for completion by 2030.
- In November 2025, ESTIC 2025 announced a Rs. 1,00,000 crore (US$ 11.28 billion) scheme to boost private‑sector research, development and innovation in India.
- Announced in October 2025, Google is set to invest about Rs. 85,890 crore (US$ 10 billion) in a 1 GW hyperscale data‑centre campus at Visakhapatnam (Vizag), through which the proposed “AI City Vizag” will be anchored.
- In Q3 2025, the IT & ITES sector led funding with Rs. 28,723 crore (US$ 2.4 billion) driven by Rapido, followed by Rs. 2,131 crore (US$ 240 million) in life sciences tech firm Axtria, and Rs. 1,461 crore (US$ 170 million) in Artificial Intelligence (AI) analytics firm Fractal Analytics.
- In Q3 2025, 141 Department for Promotion of Industry and Internal Trade (DPIIT) registered startups raised venture capital funding worth Rs. 13,326 crore (US$ 1.53 billion).
- The Goa government has launched the Goa AI Mission 2027, a strategic blueprint to build an inclusive, innovation-driven artificial intelligence (AI) ecosystem in the state. The mission aligns with the Centre’s India AI Mission. It aims to empower citizens, strengthen governance, and fuel sector-wide innovation.
- Union Minister for Communications and Development of Northeast Region, Mr. Jyotiraditya M. Scindia, launched the artificial intelligence (AI) -powered mobile application for the upcoming India Mobile Congress (IMC) 2025, themed Innovate to Transform. The ninth edition of IMC will be held from October 8 to 11, 2025, at the Yashobhoomi Convention Centre, Dwarka, New Delhi.
- Prime Minister Mr. Narendra Modi’s August 29-30, 2025 visit to Japan secured over Rs. 5,96,564 crore (US$ 68 billion) in investment pledges, alongside an economic security pact covering semiconductors, critical minerals, and AI, with discussions also advancing defence collaboration through technology transfer and joint military hardware development.
- A report from the Reserve Bank of India (RBI) suggests that generative Artificial Intelligence (AI) has the potential to enhance banking operations in India by up to 46%.
- The IT & ITES industry led investments with Rs. 49,738 crore (US$ 5.75 billion) in H1 2025. The largest deal was Rs. 3,028 crore (US$ 350 million) in data analytics and enterprise AI solutions provider Impetus Technologies, followed by Rs. 2,379 crore (US$ 275 million) in Innovaccer and Rs. 2,336 crore (US$ 270 million) in e-commerce platform Meesho.
- The computer software and hardware sector in India attracted cumulative foreign direct investment (FDI) inflows worth Rs. 8,31,772 crore (US$ 110.16 billion) between April 2000-June 2025. The sector ranked second in FDI inflows as per the data released by Department for Promotion of Industry and Internal Trade (DPIIT).
- Computer software and hardware make up 15.54% of the cumulative FDI equity inflows.
- Google inaugurated its Ananta campus in Bengaluru the company’s largest campus in India and one of its largest offices globally. Spanning 1.6 million sq. ft., the new campus can house over 5,000 employees.
- Hyderabad, known for its prominence in the IT sector, achieved exports worth Rs. 2.68 lakh crore (US$ 32.2 billion) in FY24, with a workforce of 9.46 lakh employees. This represents a YoY growth of 11.2%.
- Direct employment in the IT services and BPO/ITeS segment was estimated to reach 5.4 million in FY23 with an addition of 290,000 people.
- The revenue of India’s public cloud services market totalled US$ 6.2 billion in 2022, and it is expected to reach US$ 17.8 billion by 2027 growing at a CAGR of 23.4%.
- Announced in January 2025, Reliance Industries is set to build the world’s largest data center in Jamnagar, Gujarat, marking a major step in its entry into India's artificial intelligence (AI) sector.
- In January 2025, TCS approved the Rs. 1,625 crore (US$ 187.1 million) acquisition of TRIL Bengaluru Real Estate Five & Six Ltd. to develop delivery centres, acquiring 100% equity in one year.
- In December 2024, TCS has expanded its partnership with Bank of Baroda, India’s second largest public sector bank, to continue to implement an end-to-end financial inclusion solution over the next five years.
- In November 2024, TCS Partners With IIT KGP to Launch Advanced Research Centre for Innovation in Digital Health, Robotics & Intelligent Systems
Government Initiatives
Some of the major initiatives taken by the government to promote the IT and ITeS sector in India are as follows:
- Emphasising the priority on digital infrastructure, investments totalling approximately US$ 70 billion are already in progress in India, alongside announcements of a further US$ 90 billion. The 2026-27 Budget proposes a tax holiday until 2047 for foreign companies delivering cloud services to global customers via data centres located in India.
- The Union Budget 2025-26 allocated Rs. 20,000 crore (US$ 2.31 billion) for R&D, AI, geospatial initiatives and Atal Tinkering Labs to strengthen the innovation ecosystem and support private-sector-led research.
- The 2025–26 Budget allocates Rs. 782 crore (US$ 88.90 million) for cybersecurity measures to protect digital public infrastructure.
- The India AI Mission alone has been allocated Rs. 2,000 crore (US$ 236.4 million) in 2025-26, a significant leap from Rs. 173 crore (US$ 8.6 million) in the previous year.
- The Government has initiated a project AIRAWAT for providing a common compute platform for AI research and knowledge assimilation.
- AIKosh develops extensive datasets for AI model training, drawing from both governmental and non-governmental sources. The platform encompasses more than 5,500 datasets and 251 AI models spanning 20 sectors.
- The Union Budget 2024-25, presented by Finance Minister Nirmala Sitharaman on July 23, 2024, proposes an allocation of Rs. 1,16,342 crore (US$ 13.98 billion) for IT and Telecom sectors.
- In March 2024, the Government of India launched the IndiaAI Mission with an outlay of Rs 10,372 crore (US$ 1.25 billion) to foster the development of the nation's overall AI ecosystem. Within less than 24 months, the IndiaAI Mission has established a solid foundation for advancing the country's AI ecosystem.
- The government prioritizes cybersecurity, hyper-scale computing, AI, and blockchain. With data costs at Rs. 10/GB ($0.12/GB), India ranks among the world's cheapest.
- Cabinet approved PLI Scheme – 2.0 for IT Hardware with a budgetary outlay of Rs. 17,000 crore (US$ 2.06 billion).
- The government introduced the STP Scheme, which is a 100% export-oriented scheme for the development and export of computer software, including the export of professional services using communication links or physical media.
- The Department of Telecom, Government of India and Ministry of Communications, Government of Japan, signed an MoU to enhance cooperation in areas of 5G technologies, telecom security and submarine optical fibre cable systems.
Road Ahead
India continues to be the world’s leading offshoring destination, trusted for its ability to deliver both on-shore and off-shore services at scale. The sector is now entering a new phase, with emerging technologies such as AI, cloud, cybersecurity, and data engineering opening fresh avenues for growth. IT spending in India is expected to rise 11.1% year-on-year to US$ 161.5 billion in 2025, up from US$ 145.4 billion in 2024, according to Gartner. The Indian public cloud services market is forecast to reach US$ 13 billion by 2026, driven primarily by sectors including BFSI, manufacturing, government, software, and media.
By 2026, widespread adoption of cloud technologies could generate 14 million jobs and add nearly US$ 380 billion to India’s GDP. With a robust talent base, rising demand from non-metro hubs, and continued global confidence in its IT capabilities, India’s technology industry is well-positioned to cement its role as a driver of digital transformation worldwide.
Notes: AI - Artificial Intelligence
References: Media Reports, Press Information Bureau (PIB), Department for Promotion of Industry and Internal Trade (DPIIT), Department of Information and Technology, Union Budget 2025-26, 2026-27
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