Long Live The Back Office!
With the EU trade deal in place and the Centre expected to keep reforms on track in Budget 2026-27, the ingredients for India’s “Goldilocks” mix—steady economic growth and low inflation—may well boost confidence in this quarter.
- Jan 31, 2026,
- Updated Jan 31, 2026 7:02 PM IST
The rise of India’s information technology sector started in the early-1990s, soon after economic liberalisation, when global firms began outsourcing software development work to the country. Between 1997 and 1999, Indian firms saw a boom on account of the work they did to fix the software of older computer systems that used two-digit codes to denote calendar years.
The Y2K boom was followed by business process outsourcing and IT-enabled services by the early 2000s. Indian software engineers became the coders of the world. The formula was straight forward: offer lower costs, export talent, and turn the time-zone difference into an advantage. This was the foundation of India’s most consistent export engine. In parallel, the spread of telecom networks helped the growth of the digital backbone powering the global-delivery-from-India model.
Three decades later, it is time to ask: what will the age of artificial intelligence (AI) mean for this cornerstone of India’s economic rise and global reputation as the back office of the world? The cover story of the issue tackles this subject. Shelley Singh deals with this and other related questions including how will the industry reinvent itself, once again. Unlike earlier shifts that had a marginal impact, the fear is that AI threatens the core of the business model.
And yet, any obituary seems premature.
Listen to the industry’s own leaders. HCLTech CEO C. Vijayakumar calls AI an inflection point because “knowledge is getting commoditised.” He argues that AI expands the market—if firms modernise legacy services and build new AI-native offerings. Tech Mahindra CEO Mohit Joshi makes a related point: the Indian IT industry has accumulated deep process understanding and has the capacity to transform.
Elsewhere in the issue, Surabhi tackles another pressing question, the quality of India’s macroeconomic statistics. While the International Monetary Fund recently gave India’s national accounts a ‘C’ rating and price data a ‘B’, the country is on the cusp of its biggest statistical refresh in over a decade: retail inflation, GDP and industrial production data are being shifted to new series and base years, with updated baskets, weights and data sources. This February promises to be the month of a big overhaul of India’s big data.
Meanwhile, even as India is set to end fiscal 2025-26 on a strong growth footing, many producers remain uneasy about the prospects, perhaps on account of a less-than-expected consumption surge in some segments after last September’s indirect tax rate cuts. This may have fed into the marginal dip in confidence captured by the BT-C Fore Business Confidence Survey of 500 CEOs and CFOs for the third quarter.
With the EU trade deal in place and the Centre expected to keep reforms on track in Budget 2026-27, the ingredients for India’s “Goldilocks” mix—steady economic growth and low inflation—may well boost confidence in this quarter.
The rise of India’s information technology sector started in the early-1990s, soon after economic liberalisation, when global firms began outsourcing software development work to the country. Between 1997 and 1999, Indian firms saw a boom on account of the work they did to fix the software of older computer systems that used two-digit codes to denote calendar years.
The Y2K boom was followed by business process outsourcing and IT-enabled services by the early 2000s. Indian software engineers became the coders of the world. The formula was straight forward: offer lower costs, export talent, and turn the time-zone difference into an advantage. This was the foundation of India’s most consistent export engine. In parallel, the spread of telecom networks helped the growth of the digital backbone powering the global-delivery-from-India model.
Three decades later, it is time to ask: what will the age of artificial intelligence (AI) mean for this cornerstone of India’s economic rise and global reputation as the back office of the world? The cover story of the issue tackles this subject. Shelley Singh deals with this and other related questions including how will the industry reinvent itself, once again. Unlike earlier shifts that had a marginal impact, the fear is that AI threatens the core of the business model.
And yet, any obituary seems premature.
Listen to the industry’s own leaders. HCLTech CEO C. Vijayakumar calls AI an inflection point because “knowledge is getting commoditised.” He argues that AI expands the market—if firms modernise legacy services and build new AI-native offerings. Tech Mahindra CEO Mohit Joshi makes a related point: the Indian IT industry has accumulated deep process understanding and has the capacity to transform.
Elsewhere in the issue, Surabhi tackles another pressing question, the quality of India’s macroeconomic statistics. While the International Monetary Fund recently gave India’s national accounts a ‘C’ rating and price data a ‘B’, the country is on the cusp of its biggest statistical refresh in over a decade: retail inflation, GDP and industrial production data are being shifted to new series and base years, with updated baskets, weights and data sources. This February promises to be the month of a big overhaul of India’s big data.
Meanwhile, even as India is set to end fiscal 2025-26 on a strong growth footing, many producers remain uneasy about the prospects, perhaps on account of a less-than-expected consumption surge in some segments after last September’s indirect tax rate cuts. This may have fed into the marginal dip in confidence captured by the BT-C Fore Business Confidence Survey of 500 CEOs and CFOs for the third quarter.
With the EU trade deal in place and the Centre expected to keep reforms on track in Budget 2026-27, the ingredients for India’s “Goldilocks” mix—steady economic growth and low inflation—may well boost confidence in this quarter.