IT services revenue to cross $300 bn in FY26 as AI and ER&D drive growth

India's IT services sector is set to touch $315 bn in FY26, with AI revenues of $10-12 bn, modest headcount growth, and ER&D and GCCs driving expansion despite global headwinds

Amid global macroeconomic uncertainty and rising concerns around artificial intelligence (AI), India’s IT services industry continued to expand revenues and remain a net hirer — albeit at a slower pace.

 

The Indian IT services revenue will touch $315 billion, propelled by growth from the hardware and engineering and research and development (ER&D) segment. This represents a growth of 6.1 per cent year-on-year. 

Despite the headwinds, the FY26 revenue target is better than FY25, when the industry clocked 5.9 per cent growth. The Strategic Review indicates the export forecast will rise 5.6 per cent year-on-year, reaching $246 billion in FY26 (E) from $233 billion in FY25. 

Though a net hirer, the industry's headcount growth is softening, reflecting the non-linearity component. The industry will have a total net addition of 135,000 this fiscal year, a modest rise of 2.3 per cent in FY26. This is up from 133,000 people added in FY25. 

Rajesh Nambiar, president, Nasscom, agreed that the overall hiring from the campuses has come down, as there is a clear diversion of revenue growth and headcount addition.

 

Nasscom also for the first time shared that the AI revenue estimate for FY26 would be $10 billion–$12 billion.

 

“AI contributed very meaningfully to the topline of many companies. Many providers have moved to an inorganic strategy in AI. About 70 per cent of the top 25 providers acquired AI-native firms during last year. Almost 85 per cent of top providers have some form of agentic platform,” said Nambiar.

 

GCCs and ER&D continued to be the growth engines with significant headroom ahead, while niche engines are achieving critical mass, with cybersecurity, data analytics, cloud and GCC-as-a-service becoming increasingly embedded across multiple segments.

 

The review also added that export share stayed steady with APAC and the Middle East leading growth, the domestic market continued to expand steadily, and the vertical mix evolved with gradual gains in emerging sectors such as healthcare and travel and transportation, largely driven by GCCs.

 

Sindhu Gangadharan, chairperson, Nasscom, said, “AI is accelerating productivity and changing the nature of work, but it is also expanding the opportunity frontier. As AI gets embedded across functions, we will see roles redesigned around outcomes, deeper specialisation and significantly higher AI fluency. The industry’s focus is on building ‘Human + AI’ teams, investing in continuous skilling, and converting efficiency gains into growth, creating new jobs and new career pathways even as delivery becomes more agile and more resilient.”

 

Coming to future spend on tech, the Nasscom Global End User CXO Survey highlighted a clear increase in AI intensity: 86 per cent of CXOs expect business demand to remain stable or increase in CY26 (including 56 per cent who anticipate growth over CY25), and 90 per cent indicate increasing AI allocation within digital budgets in CY26, signalling that AI is moving from discretionary experimentation to scaled, budget-backed deployments aligned to measurable outcomes.