Indian IT is strategically repositioning for an AI-driven future, leveraging its vast talent pool and focusing on high-margin AI-led services, aiming to maintain its global leadership in technology services. According to Nasscom president Rajesh Nambiar, AI is set to dominate the IT sector in 2026, with technology firms anticipating increased IT budgets and widespread AI project adoption. In this interview, he speaks to Sudhir Chowdhary on the key trends and IT sector outlook. Excerpts:
What’s fuelling India’s IT sector growth? What were the key trends in 2025?
2025 has been a year of strategic realignment globally, and India’s technology industry has responded by steadily deepening its role across the global technology value chain. Across services, GCCs, and startups, there was a sharper and more sustained focus on next-generation technologies such as generative AI, agentic AI, and cybersecurity. Indian startups made notable progress in building sovereign AI capabilities, multilingual models, and deeptech solutions that address both domestic priorities and global market needs, strengthening India’s innovation credibility beyond services alone.
This shift has been most visible in the evolution of GCCs. India GCCs are now driving value for not just the parent organisations but also innovating as a separate entity, driving revenue, creating jobs and innovating though AI led capabilities. Equally important, talent and skilling remained central across the industry.
Organisations accelerated company-wide AI readiness efforts, ensuring large segments of the workforce are AI-aware and equipped to work alongside intelligent systems.
Nambiar on automation maturity
What’s your assessment of AI and automation maturity within Indian IT firms today?
Largely, the conversation has shifted from “what can GenAI do?” to “where does GenAI genuinely move the needle?” That is a healthy sign. We are seeing companies reassess use cases, prioritise deeper integration over cosmetic wins, and set more realistic expectations with their boards.
Spending on AI readiness has increased. Enterprises in the last one year (as of CY2024) are spending more than 10% of their digital budget on AI. If we look at the September quarter, every major firm outlined AI as the centrepiece of its growth strategy; co-developing AI-embedded cloud and digital solutions with clients; building sovereign AI data centres in India to strengthen data residency and trust and advancing agentic AI platforms that enable autonomous, contextual decision-making.
In terms of skilling readiness, across the industry, enterprises are undertaking large-scale AI skilling programmes to build a future-ready workforce, with several organisations training well over a hundred thousand employees in advanced and GenAI skills. Many have moved towards company-wide AI readiness, ensuring that a vast majority of their workforce is AI-aware and equipped to collaborate with intelligent tools.
What are the key demand drivers and investment priorities right now?
2026 is shaping up as a year of selective acceleration rather than broad-based expansion. Enterprises are expected to remain disciplined on spend, but demand will be resilient and increasingly concentrated around technologies that deliver measurable productivity, resilience, and business outcomes. As cost pressures persist globally, enterprises will prioritise investments that compress time-to-value, reduce operating costs, and improve decision quality.
This places AI, particularly GenAI and emerging agentic AI systems, at the centre of technology investment, as organisations move from pilots to scaled deployment across functions such as software engineering, operations, customer experience, finance, and supply chains. Cybersecurity and trust frameworks will remain non-negotiable, especially as AI adoption expands attack surfaces and regulatory scrutiny intensifies.
A second major driver will be core modernisation to enable AI at scale. Enterprises will continue investing in cloud and hybrid architectures, data platforms, and application modernisation, not as standalone initiatives but as prerequisites for AI-led transformation. In parallel, emerging and frontier technologies will move higher on enterprise and national priority lists, even if near-term spend remains selective. Areas such as quantum computing, semiconductors, advanced electronics, and next-generation networking will attract increased investment driven by national industrial strategies, supply-chain security, and long-term competitiveness.
Nambiar on Indian tech sector
How is India’s tech sector strengthening its preparedness for 2026?
Nasscom along with the industry is working closely with governments and global partners to diversify delivery models, deepen engagement in priority markets through our country councils, and align with evolving regulatory and policy frameworks. At the same time, the sector is investing heavily in capability-building for the next wave of technology. This includes large-scale AI readiness across organisations, accelerated skilling in data, cybersecurity, and emerging technologies and closer collaboration between industry, academia, and startups.
How will India leverage frontier technologies and advance responsible AI governance?
It cannot be any single lever, be it technology, partnerships, or policy, working in isolation. India’s approach has always been anchored in capability building, collaboration, and trust. As frontier technologies such as AI, advanced computing, semiconductors, and next-generation digital systems continue to evolve, the focus is on moving from adoption to sustained capability creation through national policy led initiatives, industry-led platforms, GCC-driven innovation, and a growing deeptech startup ecosystem.
There is a strong emphasis on advancing responsible and trusted AI governance, combining policy clarity with industry-led frameworks that prioritise safety, privacy, and accountability. Nasscom has been actively building and advocating for frameworks and resources such as the Responsible AI Resource Kit and voluntary Responsible AI Guidelines to help organisations embed governance, ethics, fairness, explainability and risk management into AI systems from design through deployment.
These frameworks support a smooth, human-centred transition where AI agents augment human capabilities without undermining safety, fairness, or societal values.2026 is shaping up as a year of selective acceleration rather than broad-based expansion. Enterprises are expected to remain disciplined on spend, but demand will be resilient and increasingly concentrated around technologies that deliver measurable productivity, resilience, and business outcomes. As cost pressures persist globally, enterprises will prioritise investments that compress time-to-value, reduce operating costs, and improve decision quality.
This places AI, particularly GenAI and emerging agentic AI systems, at the centre of technology investment, as organisations move from pilots to scaled deployment across functions such as software engineering, operations, customer experience, finance, and supply chains. Cybersecurity and trust frameworks will remain non-negotiable, especially as AI adoption expands attack surfaces and regulatory scrutiny intensifies.
A second major driver will be core modernisation to enable AI at scale. Enterprises will continue investing in cloud and hybrid architectures, data platforms, and application modernisation, not as standalone initiatives but as prerequisites for AI-led transformation. In parallel, emerging and frontier technologies will move higher on enterprise and national priority lists, even if near-term spend remains selective. Areas such as quantum computing, semiconductors, advanced electronics, and next-generation networking will attract increased investment driven by national industrial strategies, supply-chain security, and long-term competitiveness.
How is India’s tech sector strengthening its preparedness for 2026?
Nasscom along with the industry is working closely with governments and global partners to diversify delivery models, deepen engagement in priority markets through our country councils, and align with evolving regulatory and policy frameworks. At the same time, the sector is investing heavily in capability-building for the next wave of technology. This includes large-scale AI readiness across organisations, accelerated skilling in data, cybersecurity, and emerging technologies and closer collaboration between industry, academia, and startups.
How will India leverage frontier technologies and advance responsible AI governance?
It cannot be any single lever, be it technology, partnerships, or policy, working in isolation. India’s approach has always been anchored in capability building, collaboration, and trust. As frontier technologies such as AI, advanced computing, semiconductors, and next-generation digital systems continue to evolve, the focus is on moving from adoption to sustained capability creation through national policy led initiatives, industry-led platforms, GCC-driven innovation, and a growing deeptech startup ecosystem.
There is a strong emphasis on advancing responsible and trusted AI governance, combining policy clarity with industry-led frameworks that prioritise safety, privacy, and accountability. Nasscom has been actively building and advocating for frameworks and resources such as the Responsible AI Resource Kit and voluntary Responsible AI Guidelines to help organisations embed governance, ethics, fairness, explainability and risk management into AI systems from design through deployment. These frameworks support a smooth, human-centred transition where AI agents augment human capabilities without undermining safety, fairness, or societal values.