SME tracker: Global headwinds to slow down growth for ITeS MSMEs

The micro, small, and medium enterprise (MSME) segment, which accounts for 30-40 per cent revenue of the information technology-enabled services (ITeS) industry, is expected to see revenue in rupee terms grow slower year-on-year (Y-o-Y) at 7-9 per cent in 2025-26 (FY26), weighed down by weak client sentiment and tariff-related risks. Slower deal closure will also be a dampener, though its impact will be limited given the largely non-discretionary nature of deals in this industry.

 

In FY25, revenue grew an estimated 11 per cent in rupee terms to ₹4.4 trillion, supported by increased offshore workloads from cost-conscious global clients. Growth remained firm until the third quarter, and some impact of global headwinds was visible in the last month of the fourth quarter. 

ITeS MSMEs are primarily engaged in providing customer relationship management (CRM) services, which account for nearly three-fourths of the revenue pie, with key offerings in customer support, technical helpdesks and tele-sales. The banking, financial services and insurance segment, which accounts for over a third of the industry revenue, is expected to grow in line with the industry, supported by rising demand for outsourced transactional processes such as payments,

claims management and compliance-related services. 

 

In contrast, manufacturing and retail, which together account for 15-20 per cent of the revenue, are likely to witness muted growth because of global supply chain and procurement issues. 

Employee growth in the industry is expected to remain modest at 0-2 per cent in FY25 as companies adopt a cautious approach, delay discretionary projects and prioritise internal programmes to improve cost efficiency. Hiring will continue to be skills-based, with demand concentrated in automation, AI-driven models and analytics, enabling a more flexible, scalable workforce.