Tech Explained: Here’s a simplified explanation of the latest technology update around Tech Explained: Nasscom projects Indian tech sector to grow at 6.1% to $315 billion in FY 2026 in Simple Termsand what it means for users..
The Indian tech sector, led by IT service providers, is expected to reach a revenue milestone of $315 billion at a growth rate of 6.1% YoY in FY 2026, according to Nasscom’s Annual Strategic Review 2026, released on February 24. The sector is also expected to add 135,000 jobs at a 2.3% growth rate, taking the total size of the tech workforce to almost 6 million. The industry body attributed these projections to the AI-led services and growing footprint of global capability centres (GCCs) in India.
Despite the recent battering at the stock market, Nasscom expects the global IT services market to revive in 2026 due to the easing of tariff and trade pressure and rising AI investments, especially into scalable deployments. Tech exports are expected to exceed $246 billion, an increase of 5.6% over FY25.
Rajesh Nambiar, President, Nasscom, pointed out that AI became the driving force behind the transformation of tech services. He added that the impact of AI will increase as IT service companies pivot into an AI orchestration model, where they offer AI related services that include AI related technologies.
Nasscom’s optimistic projection is likely to provide some respite to the tech sector, especially IT companies that have been rattled in the last few weeks by the release of competing AI tools from frontier AI companies, especially Anthropic.
Early this month, the release of new plugins in Anthropic Claude Cowork tools triggered a panic selloff by investors, reportedly wiping out close to $50 billion in market value of Indian IT stocks, led by Tata Consultancy Services and Infosys. The selloff is driven by fears that the new AI tools can manage complex multi-step processes, rendering traditional IT services and software redundant. For instance,
Thompson Reuters’ Westlaw, which provides online legal research service to corporate lawyers also serves as workflow automation tool. Claude Cowork’s legal plugin targets those exact workflows such as NDA triage, contract redlining and compliance checks using AI agents.
Aware of the threat from AI agents, IT companies too have embraced an AI-first strategy and are offering generative AI and agentic AI tools as part of their services. For instance, TCS is working with Nvidia to provide AI solutions to telcos and has partnered with ServiceNow to help enterprises scale their AI projects and build agentic AI natively into workflows. Last month, TCS reported a revenue of $1.8 billion in Q3 FY26 from its AI services. The company also claims to have executed over 5,500 AI projects and upskilled over 180,000 employees.
According to Nasscom, the BPM sector is transitioning from a traditional full-time equivalent (FTE) model, where clients are billed based on the number of people assigned to a project, to a service-oriented, outcome-focused approach. Similarly, IT service firms have shifted from routine maintenance to complex areas like cybersecurity and data services. GCCs to have expanded rapidly in emerging cities and have
embedded AI as their operating system.
According to MeitY, India has over 1700 GCCs, generating revenue of $64 billion in FY24, while employing 1.9 million workers.
Beyond 2026, Nasscom anticipates AI spending to reach a stage of maturity in FY27. According to a Nasscom CXO survey, future growth is expected to be increasingly segment-specific, with tier-1 and mid-sized firms diverging based on domain expertise, AI readiness and talent depth.
While overall technology spending is projected to remain around 5–7%, as per Nasscom, the AI budgets are expected to grow steadily on the back of scalable AI deployments. Platform-led models, services-to solutions, outcome-based pricing, micro-vertical focus and selective M&A will give firms a competitive edge. Eventually, success will depend on a bold redesign of the business model, AI-first delivery and trust-led client engagement.
Early this week, IBM’s share price tumbled 13%, reportedly its worst in 25 years, after Anthropic pointed out that Claude Code can modernize COBOL programming language, which runs on IBM mainframes and is still used by many banks and governments.
At the recently concluded AI Summit in New Delhi, IT minister Ashwini Vaishnaw announced that