India tech’s next innings: Why India must move beyond IT services to win the $8.4 trillion opportunity

India’s technology sector stands at a structural inflection point. Valued at over $300 billion, contributing roughly 7% to GDP, generating more than $200 billion in exports, and directly employing 5.8 million people, India Tech Inc. is one of the country’s strongest macroeconomic pillars. Yet, Boston Consulting Group’s February 2026 report, India Tech’s Next Innings: Signals, Shifts, and Considerations for India Tech, argues that the next decade will demand a fundamental reset in ambition and capability. The core issue is not scale — it is composition.

Nearly 84% of India’s technology revenues are anchored in IT services and IT-enabled services. While this segment has delivered global credibility and a 17% share of the global IT services market, it is growing at just 4–5% annually. In contrast, the fastest-growing global tech value pools — AI-first companies (40%+ CAGR), hyperscale cloud platforms (~20%), semiconductors (~12%), and deep tech (~12%) — are IP-led, capital-intensive, and command far higher valuation multiples.

In short, value is migrating away from effort-based services toward innovation-driven platforms and products.

The burning platform

The global technology industry today is an $8.4 trillion market spread across nine major segments. India has meaningful scale in only one of them — IT services. Its presence in semiconductors, hyperscalers, AI infrastructure, and deep tech remains limited.

If India does not rebalance toward high-growth segments, it risks remaining underrepresented in the most valuable parts of the global technology ecosystem.

What India should do now

The report outlines a three-part strategic path, but the implications for India are structural and urgent.

1. Modernise and AI-enable the core

India cannot abandon IT services — it must upgrade them. Services firms must shift from manpower-based billing to AI-assisted delivery, platformization, and outcome-linked contracts. Large-scale reskilling in AI, cybersecurity, product engineering, and semiconductor design is essential.

India should launch national AI skilling coalitions, align academia with frontier R&D, and incentivize services firms to build proprietary platforms instead of pure execution engines.

2. Build strong adjacencies

India has a credible “right to win” in AI data and analytics, sovereign tech (India Stack–enabled platforms), and software. The government can accelerate this by:

Creating AI Centers of Excellence across sectors such as BFSI, healthcare, and agriculture

Providing co-investment guarantees for AI and deep tech startups

Incentivizing subscription-based AI platform models for IT services firms

India Stack has already demonstrated digital public infrastructure leadership. The next step is exporting it as “India Stack as a Service” to emerging markets.

3. Place big, patient bets

Semiconductors, data centers, and hyperscalers are capital-heavy, but they define the future. India must treat these as national priorities.

Policy actions could include:

Expanding semiconductor fabrication incentives and design-linked schemes

Offering R&D tax credits tied to IP creation

Building regional semiconductor and AI clusters

Attracting global hyperscalers through stable regulatory frameworks and power infrastructure

Crucially, India needs patient capital — blended public-private funds that can support 10–15 year innovation cycles typical of deep tech.

Fix structural bottlenecks

India’s R&D spending remains around 0.7% of GDP, far below innovation leaders. Brain drain continues to dilute senior technical depth. Regulatory friction and IP protection gaps add scaling complexity.

If India aims to become an AI builder, a semiconductor nation, and an IP powerhouse, capital markets, academia, industry, and policy must move in a a coordinated fashion.

India Tech’s first innings established it as the world’s back office. The next must establish it as a product nation and innovation engine. Execution strength is necessary — but no longer sufficient.