IT's FY26 revenues set to grow 6.1% to $315 billion, says Nasscom

India’s software services industry is expected to record $315 billion in revenues this financial year, marking a 6.1% growth and surpassing last year’s 5.1% rise, industry body Nasscom said in its annual strategic review.

Looking forward, Nasscom projects similar growth rate for FY27 as the AI transition phase may cause near-term slowdown.

The report also pegged AI services revenue at $10-12 billion for FY26, as enterprises move beyond pilots to scaled deployments that begin delivering measurable returns on investment.


“Despite a very cautious macro environment…the surge in tech spending was notable,” said Rajesh Nambiar, president, Nasscom, adding that enterprises redirected spending toward resilience, productivity, hardware, and infrastructure. He was speaking to reporters at the Nasscom Technology Leadership Forum (NTLF) on Tuesday.

Global Capability Centres (GCCs) would remain a key growth engine with 53% of GCCs reaching a portfolio or transformation stage, 70% defining AI roadmaps, and 83% investing in generative AI.

Industry leaders however noted that revenue growth is increasingly getting decoupled from headcount expansion.

India’s total IT and GCC workforce would expand by a modest 2.3% in FY26 to 5.95 million, translating into a net addition of 135,000 staff during the year. This follows a net increase of 133,000 last fiscal year, reflecting among the slowest rates of workforce expansion in recent years.

IT services, which accounts for the largest share of the industry, are projected to expand to $246 billion from $143 billion, while business process management (BPM) is expected to reach $59 billion, according to the data.

Engineering research and development (ER&D) is set to be the fastest-growing segment, rising to $63 billion from $59 billion over the same period.

Sector exports are forecast to rise 5.6% on-year, reaching $246 billion in FY26 from $233 billion in the previous year.

Nambiar said traditional boundaries between IT services, BPM, and ER&D are blurring. “The distinction between what was IT services, BPM, and ER&D… will disappear over a period of time,” he said.

Reimagining India’s value proposition going forward, leaders defined 2026 as the year of reset, which will witness orchestration-led growth as opposed to services or delivery-led model earlier.

Reflecting on the recent turmoil in tech stocks, Srikanth Velamakanni, vice chairperson of Nasscom said the markets are pricing only the “first-order effects” of AI disruption, while the much larger second-order expansion is yet to play out.

“There is always some kernel of truth behind any market fear or market panic,” said Velamakanni, acknowledging that revenues across IT services and SaaS are undergoing compression. “But the second order effects is that the total addressable market will expand…Companies are not going to reduce their tech budgets. They redistribute their tech budgets…the market expands, the number of use cases expands.”

He described the sector as being in a transition phase. “Right now, it seems like the darkest ever. It’s the darkest before dawn,” he said, predicting expansion could begin to show in the next 12-18 months.