Ahead of the India AI Impact Summit, government think tank Niti Aayog in a report released on Tuesday said that India’s technology services industry must fundamentally rework its business model around artificial intelligence and innovation if it is to sustain growth and remain globally competitive.
The report, Technology Services: Reimagination Ahead, has said that incremental scaling of the existing labour-intensive IT services model will be insufficient in a world where AI, automation and platform-led delivery are reshaping how technology services are consumed. Instead, it has called for a decisive shift towards AI-native, outcome-linked and product-led offerings, supported by large-scale reskilling and policy reforms.
Beyond Billable Hours
According to the roadmap, India’s tech services sector, currently valued at around $265 billion, could grow to $750–850 billion in annual revenues by 2035, while maintaining a 7–8% contribution to GDP. Achieving this, however, would require growth rates well above current trends and a reorientation away from time-and-materials billing towards value-based and outcome-driven contracts.
The report has noted that AI is compressing traditional revenue models by automating large parts of software development, testing and support work, even as it has opened up new opportunities in areas such as enterprise transformation, agentic AI systems, cloud and data infrastructure, and software platforms. Firms that fail to adapt risk being locked into low-margin service segments, it has said.
Five Pathways to 2035
The Aayog has identified five priority growth pathways for the sector, including embedding AI agents into service delivery, expanding India’s role in global software and SaaS markets, building AI-native infrastructure capabilities, strengthening R&D and innovation ecosystems, and developing technology solutions tailored to domestic demand. Together, these are intended to move Indian firms up the value chain from execution partners to strategic transformation providers.
On the policy side, the report has called for coordinated government action to support the transition. Key recommendations include simplifying regulatory processes through a national single-window mechanism for tech services, improving the innovation and R&D framework, and expanding national-level skilling and reskilling programmes focused on AI-augmented roles. It has also flagged the need for clarity on issues such as employee stock ownership plans and talent mobility to support startups and product-led firms.
The roadmap has placed the tech services sector within India’s broader economic ambitions, stating that its evolution will be central to meeting long-term growth and employment goals. It has also pointed to external pressures, including geopolitical fragmentation, data localisation requirements and changing client expectations, which make the case for diversification and resilience stronger.
The central message, according to the report, is that India’s global leadership in technology services can no longer be taken for granted. Without a coordinated push by industry and government to embrace AI-led transformation, the sector risks stagnation at a time when new technology cycles are rapidly redrawing the global competitive landscape.