Technology Sector in India Set to Grow 6% to $315 Billion in FY2026: Industry Report
India’s Technology sector is projected to expand strongly in the fiscal year 2026, with industry analysts forecasting revenue growth of around 6.1% to reach approximately $315 billion. This growth rate reflects resilience in the face of global economic uncertainty and rising innovation in emerging technologies such as artificial intelligence and cloud computing. The projection was highlighted by the National Association of Software and Service Companies (Nasscom), an industry body representing India’s IT and software services industry.
This outlook is notable because it comes at a time when parts of the global tech landscape are experiencing slower growth due to factors like tightening budgets, inflation pressures, and shifting demand patterns. India’s tech industry is standing out as a strong performer and key contributor to the national economy.
Key Drivers Behind the Growth
AI and Digital Transformation
A major driver behind this growth is the rapid adoption of advanced technologies such as artificial intelligence (AI). Businesses across sectors are integrating AI to automate processes, improve efficiency, and enhance customer experiences. India’s tech firms are increasingly offering AI‑led solutions to both domestic and international clients. Services driven by AI are estimated to contribute between $10 billion and $12 billion to the industry’s revenue in FY2026.
With over 2 million professionals receiving AI training and certification, the workforce is adapting to meet the demand for new tech services. Major Indian tech firms like Tata Consultancy Services, Infosys, and HCLTech are reporting stronger demand for digital transformation and cloud projects, underscoring the importance of AI in the sector’s growth narrative.
Global Capability Centers and Outsourcing
Another factor supporting expansion is the role of global capability centers (GCCs). These centers, operated by multinational companies, serve as innovation hubs for research, development, and business services. GCCs contribute significantly to India’s technology revenue by supporting complex digital projects, product development, and IT outsourcing.
Outsourcing remains strong as companies around the world seek cost‑effective solutions for technology needs. Despite global macroeconomic headwinds, India’s GCC and services market continues to attract demand thanks to its skilled workforce and competitive cost structure.
Employment and Workforce Impact
Job Growth in FY2026
The technology sector in India is not just growing in size but also in workforce. Nasscom forecasts that the sector will add around 135,000 net new jobs in FY2026, bringing the total number of employees to nearly 5.95 million. This growth trend highlights the sector’s role as a major employer for skilled professionals, including software engineers, data scientists, and cloud specialists.
However, hiring patterns are evolving. While the overall workforce is expanding, campus recruitment growth has slowed compared to previous years. Despite this, the sector remains a major source of employment, especially for mid‑level and experienced professionals.
Skills and Training in Emerging Tech
The shift toward AI, cloud computing, data analytics, and cybersecurity is reshaping hiring priorities. Many Indian tech companies are investing in upskilling programs to build internal capabilities in these areas. This emphasis on future‑ready skills is critical to ensure India’s workforce remains internationally competitive and aligned with the demands of global clients.
Tech Sector Revenue Breakdown
IT Services and Software Dominance
India’s revenue growth is largely driven by IT services and software exports. Traditional IT outsourcing and software development continue to contribute a significant portion of the industry’s revenue. Firms like Tata Consultancy Services, Infosys, Wipro, and HCLTech remain major contributors, serving clients around the world with technology consulting, cloud services, and digital transformation solutions.
Exports of IT services have shown resilience, although concerns about U.S. and European market demand can influence near‑term growth. Despite occasional weakness in broader India IT stock performance due to fears of AI disruption, demand for core services remains solid, with strong contract bookings reported for FY2027 projections.
Emerging Tech Segments
Beyond traditional IT and outsourcing, emerging tech segments are contributing to revenue growth. These include areas such as enterprise software, cybersecurity, digital payments, and fintech solutions. Digital products and platforms are increasingly in demand from businesses seeking scalable, globally deployable technology solutions.
Investors tracking Indian markets often view tech sector performance as a bellwether for broader innovation trends. Growth in technology revenue tends to correlate with investment flows, including in segments like AI stocks and cloud‑based enterprise equities.
Challenges Facing the Technology Sector
Headwinds from Global Demand
Despite the overall positive forecast, the technology sector faces some challenges. Global demand for outsourcing and IT projects can fluctuate with economic cycles. For example, slower discretionary spending by clients in advanced economies may dampen growth in some service categories.
Additionally, concerns over tariffs, changing trade policies, and protectionist measures in key markets like the United States remain potential headwinds. Companies in the sector need to diversify client portfolios and expand into new geographies to mitigate these risks.
AI Disruption and Market Volatility
Paradoxically, while AI contributes to growth, it also introduces challenges. Some investors exhibited volatility in Indian IT stocks over fears that AI could automate traditional work and reduce the need for certain services. This reaction caused temporary dips in valuations and market capitalisation of tech firms, wiping out significant value in the sector’s stock indices earlier in 2026.
Despite this, most industry leaders believe AI will ultimately create new opportunities, requiring adaptation rather than fear.
Role of Government and Policy Support
Digital India and Tech Initiatives
Government initiatives like Digital India, Startup India, and various incentives for technology innovation play a crucial role in supporting the sector’s growth trajectory. Public policy aimed at improving digital infrastructure, data centre readiness, and ease of doing business helps attract global investments.
National programs that encourage research in artificial intelligence, semiconductor manufacturing, and advanced computing strengthen the local technology ecosystem. This support lays the groundwork for long‑term expansion.
Infrastructure and Data Investments
Major global technology firms are also participating in India’s growth story through infrastructure and cloud investments. For example, recent commitments by multinational companies to build data centre capacity and invest in AI platforms highlight India’s rising role in the global technology landscape.
These investments enhance India’s capability to host cutting‑edge digital services and attract enterprise clients looking for scalable and secure technology solutions.
Impact on the Indian Stock Market
Stock Performance and Sector Valuation
The performance of the technology sector influences broader investment sentiment in the Indian stock market. Tech firms often represent a significant portion of benchmark indices. Their growth prospects and earnings performance are major factors in investor portfolio strategies.
For retail and institutional investors conducting stock research, understanding revenue trends, contract pipelines, and technology innovation adoption is crucial for identifying promising opportunities and managing risks.
Investment Opportunities in Tech Stocks
Investors interested in long‑term growth often look to technology stocks due to their exposure to global demand and recurring revenue models. Segments such as cloud services, digital transformation, and AI‑driven platforms are seen as attractive areas for future growth, especially as the sector expands revenue to $315 billion in FY2026.
Future Outlook Beyond FY2026
Looking beyond this fiscal year, India’s technology sector is expected to continue evolving. Growth rates may fluctuate, but sustained demand for digital services, cloud adoption, AI integration, and global outsourcing will support ongoing expansion. By 2030, projections suggest India’s technology industry could become even more significant on the global stage, contributing a larger share of GDP and generating higher export revenue.
FAQs
Growth is driven by increased demand for AI‑led services, global outsourcing, cloud computing projects, and the expansion of digital products and platforms.
The technology sector is a major contributor to India’s economy, generating hundreds of billions in revenue and employing millions of professionals. It also influences stock market performance and attracts foreign investment.
Analysts forecast continued expansion as digital transformation and global demand for technology services persist, although growth rates may vary year to year.
Disclaimer:
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.