The outlook for the IT services sector remains optimistic for FY26, with a majority of CEOs expecting business growth despite global uncertainties, according to Nasscom president Rajesh Nambiar.
Speaking to FE, Nambiar cited findings from the Nasscom Tech CEO Survey, revealing that 77% of technology CEOs foresee higher business growth in FY26, while 85% anticipate stable or increased client technology spending.
“FY25 has been a year of strategic resilience, with segments like engineering R&D and global capability centres (GCCs) driving industry expansion. The domestic technology industry added $13.8 billion in incremental revenue, bringing total industry revenue to over $282.6 billion, including hardware,” Nambiar said.
The digital engineering sector is witnessing increased traction across banking, financial services, insurance (BFSI), healthcare, and retail, with nearly two-thirds of large ER&D deals now focused on digital transformation. Meanwhile, the GCC ecosystem has strengthened significantly, with more than 1,750 GCCs now operating in the country, primarily engaged in high-value services and product engineering.
“These trends indicate an encouraging growth trajectory, and we expect the tech industry to surpass the $300 billion revenue milestone by FY26,” he added.
Domestic technology spending saw a 7% annual increase from FY24, fueled by rising enterprise software adoption and cloud solutions. Simultaneously, data centre capacity in the country expanded by 21%, supporting the growing demand for cloud computing and digital transformation.
Generative AI (GenAI) is also gaining momentum, with over 55% of tech services firms prioritising long-term co-creation partnerships for AI development. More than 95% of the top 20 domestic IT firms have integrated AI, cloud, and data solutions into their business models. Notably, approximately 15% of enterprise GenAI proof-of-concepts (PoCs) have transitioned into full-scale production.
“GenAI is at a pivotal inflection point. While widespread adoption will take time, it is set to enhance the efficiency of IT services and transform enterprises into AI-driven organisations,” Nambiar said.
On AI infrastructure, Nambiar emphasised the importance of developing specialised smaller models (SLMs) over large language models (LLMs). Indian tech firms and startups are leveraging existing LLMs to create tailored AI solutions. Companies like Fractal, Sarvam.ai, and KisaanAI are pioneering AI innovations for Indian languages and industries, backed by a robust open-source ecosystem.
“India’s AI ambitions hinge on establishing a solid computing infrastructure. With plans to deploy 18,000 GPUs, the country is building a foundation for AI models suited to its unique linguistic, economic, and social landscape,” he said.
The hiring landscape in the IT sector is evolving amid increasing AI-driven automation. Nasscom’s survey indicates cautious optimism, with skills emerging as a critical driver of job creation. According to the report, 63% of CEOs anticipate AI investments exceeding 10% of their tech spending in FY26, while 45% expect an improved hiring environment compared to FY25.
