As valuations reset and growth slows, Nasscom’s leadership forum debates whether disruption is threat—or inflection point
India’s $283 billion IT services industry is confronting one of its most disruptive transitions, powered by rapid advances in artificial intelligence.
Industry leaders gather over the next two days at the 36th Nasscom Technology & Leadership Forum 2026, at a moment when markets and management teams alike are reassessing the sector’s long-term trajectory.
The timing is hard to ignore.
Valuations reset as AI tools rattle markets
Large IT stocks have come under pressure after companies such as Anthropic unveiled tools that could challenge traditional application services models.
The Nifty IT index has fallen 14% year-to-date, underperforming the Nifty 50 by 12 percentage points.
Despite third-quarter earnings upgrades, Jefferies Equity Research notes that AI-driven developments have triggered a derating of up to 27%. Stock performance, it argues, will now hinge more on long-term business outlooks than near-term earnings beats.
In short, investors are repricing the future.
Growth slows, ambitions stay intact
The industry’s growth has slipped into single digits, a sharp departure from its double-digit heyday.
Yet the sector still targets $300 billion in revenue by 2025-26, implying roughly 6% growth.
That ambition now depends less on incremental outsourcing wins and more on repositioning within the AI value chain.
Is this the beginning of structural decline—or the start of reinvention?
Frontier technologies reshape the opportunity map
The Future of Technology Services 2030 report by McKinsey and Nasscom identifies 13 frontier technologies that could unlock $25–45 trillion in economic value by 2030.
Adoption will likely unfold across three overlapping horizons:
- 2025–2027: AI, including agentic AI, scales from pilots to enterprise-wide deployment.
- Compute and connectivity—semiconductors, advanced networks, cloud, edge, cybersecurity—accelerate to support AI demand.
- 2027–2030: Bioengineering, robotics, sustainable energy and mobility gain momentum.
- Beyond 2030: Immersive, quantum and space technologies converge and scale.
For IT services firms, this reframes the opportunity.
Not just coding and maintenance—but enabling enterprises to integrate, modernise and orchestrate complex systems around emerging technologies.
Complexity remains the moat
Rajesh Nambiar, president of Nasscom, argues that fears of plug-and-play AI disruption oversimplify reality.
Enterprise environments remain deeply complex:
- Legacy infrastructure
- Regulatory obligations
- Fragmented databases
- Cybersecurity constraints
- Multi-system integrations
“This is precisely where services companies add value,” he said, pointing to integration, microservices, and stitching disparate systems together.
The idea that tools such as Claude Cowork can instantly replace this ecosystem, he suggests, is misplaced.
AI may automate tasks—but it does not erase complexity.
A $300–400 billion AI services prize
At its recent Investor AI Day, Infosys pegged the AI services opportunity at $300–400 billion.
That figure underscores why leaders see disruption not merely as threat, but as expansion.
The challenge lies in recalibrating operating models, reskilling talent, and shifting portfolios toward higher-value AI-led services.
The sector stands at a crossroads.
Markets have reacted with caution. Boards are recalculating strategy. Clients are experimenting faster than before.
But history offers perspective: India’s IT industry has repeatedly adapted—from Y2K to cloud to digital transformation.
This time, the shift is more foundational.
AI is not another service line. It is the infrastructure of the next era.
TL;DR:
India’s $283 billion IT sector faces valuation pressure and slowing growth as AI tools disrupt traditional service models. Nifty IT is down 14% YTD, with deratings up to 27%. Industry leaders at Nasscom argue AI is an inflection point, opening a $300–400 billion services opportunity if firms recalibrate strategy.
AI summary:
- Nifty IT down 14% YTD; valuations reset
- AI tools challenge traditional IT services
- Growth slows to single digits
- 13 frontier technologies may unlock $25–45T
- AI services opportunity pegged at $300–400B
