Advantage India
Growing
Demand
*Strong growth in demand for export from new verticals.
*India’s AI market is projected to reach US$ 28.8 billion by 2025 at a 45% CAGR, with Global Capability Centres expected to generate 22–25% of net new white-collar tech jobs in 2025; of the 4.7 million new tech jobs projected by 2027, over 1.2 million are likely to come from GCCs, driven by GenAI and engineering R&D.
*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.
*IT & BPM industry is well diversified across verticals such as BFSI, telecom and retail.
*Increasing strategic alliance between domestic and international players to deliver solutions across the globe.
Competitive
Advantage
*India’s technology industry is on track to double its revenue to Rs. 43,10,000 crore (US$ 500 billion) by 2030.
*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 allocates Rs. 500 crore (US$ 58 million) for a Centre of Excellence in AI for Education, aiming to enhance skills, personalize learning, and transform education.
*The PLI scheme for IT Hardware and its 2.0 version have generated Rs. 10,014 crore (US$ 1.14 billion) in production, Rs. 522 crore (US$ 59.3 million) in investment, and 3,879 jobs as of December 2024.
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). India’s AI Mission has also added momentum by securing 38,000 GPUs in September 2025, tripling its original target of 10,000 and strengthening compute power for researchers, startups, and enterprises developing advanced AI models.
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, the country climbed six places in the Global Innovation Index 2024 to secure the 39th position, highlighting its rising global competitiveness in technology and innovation.
Market Size
As per NASSCOM, India’s IT industry revenue has expanded from US$ 118 billion in FY15, including US$ 100 billion in exports, to an estimated US$ 283 billion in FY25, with exports contributing US$ 224 billion. IT exports rose 12.48% in FY25, up from US$ 199.5 billion in FY24, with STPI-registered units contributing Rs. 10.64 lakh crore (US$ 124.56 billion). Export of IT services remained the largest contributor, accounting for more than 65% of total IT exports. The United States continued to dominate as the top market with US$ 103.2 billion (54.1%) of exports, followed by Europe at US$ 58.8 billion (30.8%), including the United Kingdom at US$ 26.8 billion (14.1%). Asia, Australia & New Zealand, and Canada together accounted for about 10.5%. Within the export mix, BPM, engineering and R&D (ER&D), and software products contributed 26% and 8% respectively in FY24.
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. IT spending in India is estimated to have grown 11.1% in 2024 to reach US$ 138.6 billion, up from US$ 124.7 billion in 2023. The 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.
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.
- 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 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%.
- Announced in July 2025, Google’s US$ 6 billion investment to develop a 1-gigawatt data center in Visakhapatnam, Andhra Pradesh, representing the largest single data center investment in Asia.
- In July 2025, the IT & ITES industry led private equity funding with investments worth Rs. 5,994 crore (US$ 696.46 million). The largest deal was the Rs. 1,461 crore (US$ 170 million) investment in artificial intelligence (AI) analytics firm Fractal Analytics. The second-biggest transaction was the Rs. 613 crore (US$ 70 million) funding in risk management company Safe Security, followed by a Rs. 518 crore (US$ 60 million) investment in conversational AI platform Gupshup.
- In Q1 2025, the IT & ITES industry topped the funding chart with investments worth Rs. 33,603 crore (US$ 3.88 billion), led by deals in Impetus Technologies, Innovaccer, and Meesho.This was followed by the acquisitions of Wingify Software for Rs. 1,732 crore (US$ 200 million) by Everstone and Qburst by Multiples PE.
- 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. 7,84,971 crore (US$ 110.70 billion) between April 2000-March 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 15.19% 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 centers, 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 Center 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:
- 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 Cabinet approved an allocation of over Rs. 10,300 crore (US$ 1.2 billion) for the IndiaAI Mission, marking a significant step towards bolstering India’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 domestic public cloud services market, which grew to US$ 3.8 billion in the first half of 2023, is projected to touch US$ 17.8 billion by 2027.
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
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