Market report

Posted On: February 19, 2026

Indian IT Sector Analysis Report: Market Trends and Strategic Insights | Feb 2026

Sector Overview

India’s IT & BPM sector is a cornerstone of the economy, contributing USD 283 billion in FY24 (~7.3% of GDP) and projected to reach USD 350 billion by FY26 (~10% of GDP). The sector remains bullish, supported by digital transformation, AI adoption, and global capability centres (GCCs).

The Indian IT sector is expanding rapidly, driven by strong growth factors such as cloud adoption, AI/GenAI integration, rising demand for cybersecurity, and the expansion of Global Capability Centres (GCCs). At the same time, it faces critical risks including global demand volatility, high talent attrition rates, and increasing regulatory compliance requirements. Major trends shaping the industry include automation of processes, strengthening of digital exports, and a growing emphasis on sustainability in IT infrastructure, positioning the sector as both dynamic and resilient in the global market.

Market Size and Growth Metrics

• Market Size (FY24): USD 283 billion.
• Exports: USD 224 billion.
• Historical Growth: From USD 118 billion in FY15 to USD 283 billion in FY24.
• Forecast: USD 350 billion by FY26.

Market Dynamics and Drivers

• Growth Drivers: Cloud adoption, AI/GenAI, digital transformation, GCC expansion.
• Supply Chain: Skilled workforce, digital infrastructure, global delivery networks.
• Technological Trends: Generative AI, cybersecurity, automation, data analytics.
• Consumer Trends: Rising enterprise demand for digital services, remote work, cloud migration.

Competitive Landscape

Regulatory Measures         

SWOT Analysis – Indian IT Sector

Strengths

• India is the world’s largest IT services exporter, contributing ~18% of global outsourcing.
• Over 5 million IT professionals, supported by strong STEM education and English proficiency.
• IT exports reached USD 224 billion in FY24, with consistent double-digit growth.
• Initiatives like Digital India, Startup India, and National Policy on Software Products (2019) provide structural backing.
• Presence of large firms (TCS, Infosys, Wipro, HCL) and over 1,600 Global Capability Centers (GCCs).

Weaknesses

• Talent retention remains a challenge, especially in niche areas like AI and cybersecurity.
• Global clients exert strong bargaining power, reducing margins.
• Heavy reliance on North America and Europe makes the sector vulnerable to external shocks.
• Domestic IT spending (~USD 160 billion in FY25) is growing but still smaller compared to exports.

Opportunities

• Expected to boost productivity by 43–45% over the next five years (MeitY Digital Economy Report).
• Rising demand for enterprise cloud solutions and secure digital infrastructure.
• Expansion projected to generate 1.2 million new tech jobs by 2027 (NASSCOM).
• Indian software product industry projected to reach USD 100 billion by 2025 (National Policy on Software Products).
• Growth in healthcare IT, fintech, and engineering R&D.

Threats

• Recessionary trends in the US/EU could reduce outsourcing demand.
• Compliance with India’s Digital Personal Data Protection Act (2023) and global standards (GDPR, HIPAA).
• Automation, low-code/no-code platforms, and AI substitutes may reduce demand for traditional IT services.
• Trade tensions, visa restrictions, and cybersecurity threats.

Future Outlook

• ₹10,300 crore allocated under IndiaAI Mission (2024–2029) to strengthen AI capabilities.
• A provision of ₹1,000 crore has been made for ISM 2.0 in FY 2026–27. The initiative supports the development of core electronics manufacturing capabilities that underpin digital infrastructure, including data centres and advanced computing systems.

CONCLUSION

India’s IT sector is set for sustained expansion, with revenues projected to reach USD 350 billion by FY26, driven by cloud adoption, AI integration, cybersecurity demand, and government-backed initiatives, while risks such as global demand volatility, talent attrition, and automation substitutes remain. Consider long-term investment exposure to the Indian IT sector, focusing on its growth potential and resilience, while maintaining caution around global headwinds and margin pressures.

 Sources

• Ministry of Electronics & Information Technology (MeitY) – Digital Economy Reports
• NASSCOM Annual Strategic Review 2025 – Industry size, exports, forecasts
• National Policy on Software Products (2019) – Government framework
• Digital Personal Data Protection Act (2023) – Legal compliance
• NAICS Official Classification – Industry coding standards
• invest up.gov.in

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