Youngest & strongest contributor to economy accounts for more than 50% of services exports
India’s Information Technology (IT) and software sector has undergone a remarkable transformation over the past decade, solidifying its position as a global leader in technology services, software development, and digital innovation. The sector has been a critical pillar of India’s economic growth, contributing significantly to its GDP and providing employment to millions of individuals.
The Indian IT and software industry is the cornerstone of the country’s economy, contributing significantly to GDP and employment. It contributed around 7.5 per cent of India’s GDP in FY 2023-2024, a share that has grown consistently over the years due to the expansion of digital services and exports.
The sector directly employs around 5 million professionals making it one of the largest employers in the organised sector. It also supports indirect employment for around 8 million people through ancillary services, such as facility management, transport, and catering.
IT services account for 56 per cent of India’s total services exports. In FY 2023-24, IT services exports were valued at over $194 billion, making India a global leader in software exports.
From 2010 to 2020, the sector’s revenue surged, driven largely by a high demand for IT services from global markets, particularly North America and Europe.
The Indian IT services industry, which includes software development, consulting, and business process outsourcing (BPO), saw consistent year-on-year growth.
According to Nasscom, India’s IT and Business Process Management (BPM) industry reached a revenue of over $190 billion in FY2020, with exports accounting for the majority of this figure. A key factor in this growth has been the availability of a large pool of skilled professionals at competitive labor costs, which has attracted international clients looking to outsource their IT functions.
The sector’s digital transformation journey has also been a defining characteristic. From basic website development to advanced software solutions in AI, blockchain, and data analytics, Indian firms adapted quickly to the changing demands of the global market. The expansion of cloud computing technologies and the increasing demand for cybersecurity solutions have also opened new avenues for growth. India, with its vast IT infrastructure, has become a crucial player in the global digital ecosystem.
India’s IT sector has also experienced notable challenges. The rapid growth in the early part of the decade was often accompanied by concerns over labor displacement due to automation and the commodification of certain IT services. Additionally, the rise of protectionist policies in key global markets, particularly the United States, impacted the sector’s ability to freely send skilled labor across borders. The implementation of stricter immigration laws, such as the H-1B visa restrictions, posed a significant hurdle for Indian IT companies that relied on overseas talent.
As we move into 2025 and beyond, India’s IT and software sector is set for continued evolution, driven by cutting-edge technologies and shifting global dynamics. India’s expertise in IT services positions it well for the AI revolution. The demand for cloud-based solutions will continue to rise, opening doors for Indian IT firms to provide Software-as-a-Service (SaaS) solutions. India’s growing base of tech startups is expected to lead the way in SaaS innovations.
With cyber threats becoming more sophisticated, the need for robust cybersecurity solutions will be paramount. Indian IT companies will invest heavily in security services and solutions, leveraging their expertise in the field.
