India’s IT sector is expected to grow in high single digits in the current fiscal year and the next, even as AI threatens to structurally reshape the industry.
Industry body Nasscom on Tuesday said IT services industry revenue is likely to grow 6.1% year-on-year to $315 billion in 2025-26, with a similar amount expected to grow in the next fiscal year. This growth will be driven by AI-led services as well as business at global capability centres. In FY24, the sector generated revenues of $297 billion, compared to the earlier estimate of $283 billion.
The IT services industry is facing a double whammy, that is slowing demand and the threat of disruption from AI tools. The selloff in Indian IT stocks has resulted in a loss of about $50 billion in market capitalisation.
However, Tata Consultancy Services Ltd, Infosys Ltd and HCLTech indicated better demand for FY27 driven by strong contract bookings and rebound in discretionary spending.
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Additionally, the industry is expected to add 135,000 jobs on a net basis, taking the total headcount to 5.95 million in FY26, Nasscom said. This compares with 5.8 million in FY25 and 5.67 million in FY24.
“There is no doubt that the overall recruitment from campus has come down significantly compared to earlier,” said Rajesh Nambiar, NASSCOM president.