India’s tech sector is forecast to reach approximately $315 billion in revenue in fiscal year 2026, with growth of about 6.1% over the prior year, according to the industry body Nasscom’s Strategic Review for 2026. The forecast incorporates revisions to last year’s figures and reflects a mix of resilient services demand, the expanding footprint of Global Capability Centres (GCCs), and early-phase commercialisation of AI-led offerings.
MAJOR FINDINGS
- FY26 revenue projection: ~$315 billion, growth ~6.1% year-on-year.
- Nasscom revised its FY25 revenue estimate upward relative to prior public figures, an adjustment that tightens the base for FY26 growth calculations.
- Net hiring outlook: India’s tech sector is expected to add roughly 135,000 net new jobs in FY26, taking total employment close to 6.0 million.
- Primary demand drivers identified: AI-enabled services, cloud modernisation, and growth of GCCs (offshore delivery and engineering hubs).
- Risks called out: near-term demand variability in discretionary spend, disruption from advanced AI tools to traditional service models, and public market valuation shocks among large IT firms.
SECTORS FOCUS: WHERE THE GROWTH COMES FROM
- IT Services and Digital Transformation
The largest share of revenue continues to arise from IT services, digital transformations, cloud migration projects and managed services. Clients are selectively resuming discretionary spend on transformation initiatives, and that trend underpins the headline growth projection. Nasscom’s review and market reporting indicate moderate recovery in enterprise buying cycles compared with the prior fiscal year. - AI-Led Services & Productisation
A central theme of India’s tech sector strategic review is the accelerating role of AI as a revenue enabler rather than solely a cost saver. Consulting and implementation of AI solutions, productisation of vertical AI stacks, and the emergence of AI-native offerings from mid-sized vendors are key contributors to the forecast. Large global cloud and enterprise vendors’ investment commitments in Indian AI infrastructure (announced at recent summits) further validate this channel. - Engineering, R&D and GCCs
Engineering & R&D (ER&D) and GCCs remain a durable growth engine; higher-value engineering work and product engineering contracts are lifting average deal value and reducing pure arbitrage dependency. Nasscom highlights the expanding role of GCCs as both delivery centres and local product R&D hubs. This structural shift supports better revenue resilience and margin quality versus prior cycles. - BPM and Outsourced Services
Business Process Management (BPM) and knowledge process outsourcing continue to contribute but face margin pressure from automation and AI substitution in routine tasks. The net effect is slower topline expansion but ongoing demand for higher-complexity BPM services.
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DETAILED ANALYSIS AND FINDINGS
- Base effect and the revision to FY25 matter
Nasscom’s upward revision of FY25 revenue tightened the growth baseline for FY26. In practical terms, this means that the 6.1% growth projection is being measured against a slightly stronger FY25 than earlier public estimates, changing the narrative from a dramatic rebound to a steadier recovery. Analysts and investors should therefore interpret the 6.1% figure as cautious optimism rather than a broad-based reacceleration. - AI is both an opportunity and a structural disruptor
The industry is at an inflexion where AI is generating new contract categories (AI-ops, domain-specific models, inference at edge) while simultaneously threatening legacy revenue pockets (low-value labour arbitrage and repetitive coding tasks). Financial outcomes will be heterogeneous: firms that productise capabilities and capture platform plays stand to gain; purely labour-arbitrage players face margin and growth compression unless they pivot. Nasscom’s framing, echoed in event disclosures from major cloud and industrial investors, confirms this dual role for AI. - Jobs quantity versus quality
Net hiring of ~135,000 in FY26 is a headline-positive but masks shifts in hiring composition. A large share of new roles will be in cloud engineering, data sciences, and AI-ops, while campus hiring for entry-level roles has dropped materially. This implies near-term skills mismatch risks, pressing the need for large-scale reskilling and industry-academic collaboration. Nasscom’s other workforce initiatives and government/industry roadmaps align with this inference. - Client geography and concentration risk
A significant portion of India’s tech sector revenues remains export-led, concentrated in North America and Europe. Macroeconomic uncertainty and corporate spend cycles in those markets, therefore, remain principal external risk vectors. Growth in non-traditional markets and domestic digital demand will partially offset this concentration but not eliminate it. Nasscom’s strategic materials underline the importance of geographic diversification as a policy and commercial priority. - Capital markets and valuations
The market has already signalled caution: sizeable market-cap drawdowns in listed IT stocks this month reflect investor doubts about near-term demand and margin trajectories in the face of rapid AI adoption. These valuation moves complicate capital allocation decisions for publicly listed firms (buybacks vs. capex vs. acquisitions). Industry bodies note this as a short-to-medium term headwind even as fundamental demand improves.
CONCLUSION
The Nasscom Strategic Review 2026 of India’s tech sector projection to $315 billion at ~6.1% growth is a measured, mid-cycle forecast: it assumes continued adoption of AI and cloud, a steady pipeline from GCCs and ER&D, and selective improvement in discretionary enterprise spend. Execution risks, particularly around talent adaptation, client geography dependence, and rapid technology disruption, will determine whether India’s tech sector inches forward or reaccelerates meaningfully. For policymakers, the priority is clear: focus on reskilling at scale, data-and-compute infrastructure, and incentives that catalyse product-centric engineering in India.
Read the full report: Nasscom’s Strategic Review of India’s Tech Sector for 2026
