The report released on Monday by Nasscom and McKinsey, titled Perspective 2025: Shaping the Digital Revolution', said the industry is "well on track" to grow from $132 billion in FY 2014-15 to $225 billion by 2020 and further touch $350 billion by 2025.
Out of the $350 billion, exports are expected to account for about $280 billion and $70 billion would be from the domestic market.
"The industry is well on track for growth. There is a continued progression of double digit growth despite expansion of base. But below the calm waters, there is a lot of churn happening as well and companies will have to do a lot of things to address the challenges as well," Nasscom President R Chandrashekhar said today.
According to Nasscom, the Indian IT sector has a chance to grow and expand significantly as the range of products and services requiring enabling of information technology widens.
Also according to the report the next $100 billion would help add around two million jobs in the sector. "The industry is expected to grow at over 11 per cent to $225 billion in 2020 and 10 per cent-plus to $350 billion by 2025.
About 1.2-2 million people will be added with the next $100 billion revenue," the report said.
Chandrashekhar added that the industry is facing number of roadblocks starting from geopolitical to regulatory issues. Also he said that there is a need for innovation and disruption.
The report further added that driven by the adoption of digital technology, the total addressable market for global technology and business services will likely expand to about $4 trillion by 2025, growing at an average annual rate of about 3.6 percent.
Also it said that, the global and domestic market presents a huge opportunity for companies that can build expertise in these new technologies and deliver value through them.
"The technology and services industry in India has become a transformational partner for its customers. The report identifies innovative and disruptive technologies that will shape the enterprise of the future," B V R Mohan Reddy, Chairman, Nasscom, said.
Reddy also said that issues with taxation and difficulties around starting and exiting businesses are major problems the sector is facing.
"We are engaging with the government to suggest how it can be made easy for entrepreneurs to start business. We are looking at rebranding Nasscom and the role that we play to reflect the changes in the environment," he added.
McKinsey & Company Managing Director India Noshir Kaka added that IT companies trying to prosper in this day and age will have to work in six new areas, including the Internet of Things (IOT), cyber security, social, mobility, analytics and cloud.
"Probably the most pressing need is for companies to develop offering along with new digital service lines, even as they re-invent their traditional service lines," he said. "The focus on Digital India, skills India and other such initiatives will drive consumption in India."