India IT Industry Set for 6.1 Per Cent Growth to $315 Billion in FY26 Despite AI Disruption

India’s technology industry is on track to record revenue of $315 billion in the financial year ending March 2026, representing a 6.1 per cent year-on-year increase, according to Nasscom’s latest annual report released in February. The projection signals steady growth despite mounting pressure from artificial intelligence-native competitors and ongoing geopolitical uncertainty.

Revenue Mix Reflects a Diversified Sector

The FY26 revenue breakdown highlights the breadth of the industry: IT services at $149 billion, business process management at $59 billion, engineering research and development at $63 billion, software products at $23 billion, and hardware at $21 billion. Indian IT exports are projected to rise 5.6 per cent year on year to $246 billion, up from $233 billion in FY25.

Nasscom president Rajesh Nambiar described FY25 and FY26 as a structural transition phase. While enterprise spending was not cut during the period, it was redirected towards resilience, productivity and AI-led transformation rather than discretionary expansion.

AI Drives New Revenue Streams

The rise of generative AI has created both headwinds and opportunities. India’s largest IT companies, including TCS, Infosys, Wipro and HCL Technologies, have built dedicated AI practices and reported growing order books for AI consulting, implementation and managed services. AI-related revenue is estimated to contribute roughly $8 billion to the sector in FY26, up from $4.5 billion the previous year.

Global AI labs are also increasing their footprint in India. Anthropic opened a Bengaluru office earlier this year, joining OpenAI, Google DeepMind, and Meta AI in establishing Indian engineering centres. Domestically, the launch of BharatGPT-2, India’s sovereign AI model, has demonstrated the country’s ambition to develop homegrown language intelligence capabilities.

Hiring Outlook Remains Positive

The industry is expected to add 135,000 jobs on a net basis in FY26, taking the total headcount to 5.95 million. While this represents a slower pace of hiring than pre-pandemic years, Nasscom noted that the quality of roles is shifting, with greater demand for AI engineers, data scientists and cloud architects.

Fresh graduate intake has stabilised after two years of contraction, with TCS, Infosys, and Wipro all confirming campus hiring targets for FY27. However, industry analysts caution that routine coding and testing roles face continued pressure from AI-driven automation tools.

Challenges on the Horizon

Despite the positive growth outlook, the sector faces a triple challenge: intensifying competition from AI-native firms, a strong US dollar that cuts into margins for rupee-denominated costs, and regulatory uncertainty around data localisation norms. The broader technology landscape in India is also evolving rapidly, with telecom, fintech and deeptech startups competing for the same talent pool.

Industry leaders remain confident that India’s advantages of scale, engineering depth and delivery resilience will sustain growth. OpenAI’s recent media acquisition ahead of its planned IPO signals how aggressively global tech firms are diversifying, a trend that could unlock further outsourcing opportunities for Indian service providers.