"Generative AI is the most powerful tool for creativity and productivity we have seen," - Jensen Huang, CEO, Nvidia
Technology sector lens
The Indian technology industry faces modest growth through 2027. CRISIL predicts mid-single digit growth as global demand remains cautious. Revenue in 2025-26 may rise 6-8 per cent, largely driven by rupee depreciation rather than core business expansion. The speed at which industry outlook has changed over the past 3 years is mind-boggling!
Headwinds
Growth is limited by sluggish demand in the US and Europe, which provide 85 per cent of revenue. Geopolitical tensions have caused clients to cut discretionary spending, reflecting the impact of a restrained global environment on service providers.
AI as growth driver
Artificial intelligence and Generative AI are now vital catalysts for expansion. These technologies drive new deals as companies prioritize productivity improvements, helping firms secure contracts despite muted traditional staffing needs across the broader sector.
Sector performance and financial resilience
The banking sector remains a primary revenue contributor despite high interest rates. With healthy margins of 21-22 per cent, technology firms are using cash surpluses for strategic acquisitions to strengthen their niche digital capabilities and market position.
Capability Centres
The expansion of Global Capability Centres (GCCs) in India poses a risk as corporations handle technology needs internally. Delays in economic recovery and shifts in visa regulations also challenge the industry outlook for the next few years.
Summary
The Indian technology sector faces modest growth through 2027 due to cautious global spending. While macroeconomic uncertainties and internal capability centres pose risks, generative ai adoption and stable margins are expected to support a gradual recovery for the entire industry over time.
Food for thought
Will the rise of GCCs in India eventually replace the traditional technology services model altogether?
AI concept to learn: Global Capability Centres (GCCs)
Global
Capability Centres (GCCs) are offshore or near-shore hubs set up by
multinational companies to deliver high-value work beyond cost
arbitrage. Modern GCCs handle engineering, data analytics, AI,
cybersecurity, finance, R&D, and product development. They
increasingly drive innovation, own end-to-end processes, and build
global platforms. With AI adoption, GCCs are evolving from execution
centres into strategic partners that combine domain expertise, digital
skills, and scalable talent to support core business transformation.
[The Billion Hopes Research Team shares the latest AI updates for learning and awareness. Various sources are used. All copyrights acknowledged. This is not a professional, financial, personal or medical advice. Please consult domain experts before making decisions. Feedback welcome!]
COMMENTS