The AI Revolution: unlocking $500 billion opportunity for India's Tech Services Industry

Artificial Intelligence (AI) is transforming India's tech services industry, with Agentic AI expected to unlock $300–500 billion in opportunities. A Nasscom-McKinsey report highlights AI’s growing role in boosting innovation and productivity, despite short-term revenue slowdowns. Demand for AI services is set to grow 12–15% annually, with India’s global capability centres evolving into innovation hubs. Experts emphasize hybrid teams, reskilling, and operational shifts as critical for success. Balancing legacy services with AI-driven innovation is key to India’s global leadership.

Artificial Intelligence (AI) is poised to play a transformative role in shaping the trajectory of India’s technology services sector. A recent report released by Nasscom in collaboration with McKinsey & Company sheds light on how the emergence of Agentic AI is set to unlock unprecedented opportunities worth $300–500 billion. This revolutionary phase will usher in a new era of collaboration, where human expertise and intelligent AI agents work as cohesive hybrid teams.

The Changing Landscape of India’s Tech Sector

Between 2020 and 2025, India’s tech services industry underwent substantial shifts, driven by the pandemic-induced digital acceleration, the rapid rise of AI, and evolving geopolitical dynamics. As companies reassess their technology budgets, AI is emerging as a pivotal force, steering investments toward innovation and enhanced productivity.

The report underscores that while India is expected to maintain its competitive edge in the global tech services arena, short-term revenue growth may slow. However, the industry is projected to bounce back strongly between 2027 and 2030. In the meantime, traditional service lines may contract, but the demand for AI and data-driven services is anticipated to grow at an impressive rate of 12–15% annually over the next five years.

India’s Emerging Role as a Global Innovation Hub

One of the report’s key findings is the growing prominence of global capability centres (GCCs) in India. These centres are evolving beyond their traditional roles to become global innovation hubs for enterprises, further solidifying India’s position in the global tech ecosystem.

Expert Insights: Humans and AI as Co-Creators

Rajesh Nambiar, President of Nasscom, emphasized that the future of technology services will be shaped by the seamless integration of human expertise and AI-driven automation. According to him, hybrid teams will redefine delivery models, productivity metrics, and pricing structures in the next three to five years.

“India holds a unique position to lead this transformative shift,” Nambiar stated. “However, this will necessitate a significant push toward reskilling professionals and reinventing service offerings.”

Noshir Kaka, Senior Partner at McKinsey & Company, echoed this sentiment, calling Agentic AI a “once-in-a-generation” growth opportunity. He emphasized that for the industry to capitalize on this potential, it must overhaul its operational models, prioritize research and development, and cultivate talent adept at navigating the AI-driven landscape.

The Road Ahead: Balancing Legacy and Innovation

To maintain its status as a global leader in technology services, India’s tech sector must strike a balance between preserving its core services and accelerating its pivot toward AI-powered innovation. Bold partnerships, new delivery mechanisms, and a relentless focus on reskilling will be essential to staying ahead in the AI era.

The findings of the report make it clear: the convergence of human ingenuity and AI innovation is not just an opportunity but a necessity for the future. With the right strategies, India is well-positioned to lead the global technology revolution in the years to come.