AI, GCCs are pushing India’s IT sector into a new phase: Economic Survey

India's information technology sector is undergoing a significant transformation, driven by advancements in artificial intelligence (AI), cloud computing, and the emergence of Global Capability Centres (GCCs). According to the Economic Survey 2025-26, these changes are reshaping how international companies leverage Indian talent. The report highlights that in the fiscal year 2025, the IT and IT-enabled services (IT-ITeS) sector solidified India's standing as a global hub for technology and innovation. This growth is bolstered by rising revenues, the expanding influence of GCCs, and a deeper involvement in sophisticated technology endeavors. As demand pivots towards cutting-edge technologies like generative AI, data engineering, and cybersecurity, the industry is moving away from conventional outsourcing models, creating new opportunities for Indian firms while necessitating rapid adaptations in skills and delivery approaches. Nasscom forecasts that revenues for the IT and ITeS industry will reach $283 billion in FY25, reflecting a year-on-year increase of 5.1%, compared to 3.9% in the previous year. Furthermore, IT services exports, which are crucial for stabilizing the external economy, are projected to rise by 3.7% in FY25. GCCs are increasingly integral to India's technology landscape. Initially focused on back-office operations, many of these centres, established by multinational corporations, are now engaged in core digital initiatives and AI projects. This shift is aiding India in ascending the technology value chain. Cybersecurity is also emerging as a vital growth sector, with India's cyber market valued at approximately $6 billion in 2023 and expanding at around 30% annually. The country has achieved Tier-1 status on the International Telecommunication Union’s Global Cybersecurity Index, showcasing its commitment to enhancing cybersecurity capabilities. Moreover, India's ranking in the UNCTAD Frontier Technology Readiness Index has improved, climbing from 48th in 2022 to 36th in 2024. However, challenges remain, including uneven internet access and skill levels across different regions, which could hinder the broader adoption of advanced technologies.