Nasscom Chairperson Srikanth Velamakanni expects a major revenue acceleration for the Indian IT sector starting in FY28, driven by the shift toward artificial intelligence. This outlook aligns with a 14.2% jump in global IT spending projected for 2026. However, investors are watching how quickly companies can transition from traditional outsourcing models to AI-optimized solutions.
The Indian IT services industry is positioning itself for a new cycle of growth, with leadership pointing to the upcoming fiscal year 2028 as a turning point for revenue acceleration. Nasscom Chairperson Srikanth Velamakanni recently emphasized that artificial intelligence is acting as a primary growth accelerator, rather than a threat, to the sector. While the industry has navigated a period of slowed demand and cautious client spending, the shift toward AI-based solutions is expected to unlock significant momentum in the coming years.
Global Spending Trends and AI Infrastructure
This optimistic outlook is supported by a significant shift in global technology budgets. Research firm Gartner has revised its 2026 forecast for global IT spending, projecting it to reach $6.37 trillion, which represents a 14.2% increase over the previous year. A major driver of this spending is the massive investment in AI infrastructure, with data center systems spending alone expected to jump 62.5% in 2026. For Indian IT firms, this capital expenditure by global technology companies creates a clear opportunity to secure contracts for AI application development, platform modernization, and complex data architecture.
Transition Challenges and Market Reality
While the long-term potential for AI-driven growth is clear, the path to FY28 involves significant operational shifts. The industry is currently moving away from traditional labor-based contracts—where revenue was tied to the number of employees working on a project—toward solutions that utilize autonomous AI agents.
This transition creates a period of uncertainty. Investors should track the potential for short-term revenue compression as companies renegotiate old contracts. There is also the reality of high costs associated with the infrastructure needed to support these AI services, which can place pressure on operating margins in the short term. Additionally, the rapid pace of AI adoption raises questions about how quickly firms can reskill their workforce to remain relevant in a market where entry-level roles are increasingly being automated.
What Investors Should Monitor
The key for the sector will be the actual execution of these AI-led strategies. Investors may want to look beyond headline growth numbers and monitor how effectively IT firms are replacing revenue from legacy outsourcing contracts with higher-value AI and data services. The speed at which global enterprises move from testing AI models to full-scale, paid implementation will be a critical factor in whether the industry hits these growth targets. Furthermore, monitoring the cost of AI infrastructure and its impact on overall profit margins will be essential for understanding the true financial benefit of this technological shift.