Nasscom, with McKinsey & Company as knowledge partner, released key findings of its upcoming report Future of Technology Services: Leading with AI. The report provides a comprehensive view of how the technology services industry has evolved, the realities shaping it today, and the opportunities that lie ahead as the sector prepares for a decade of accelerated change.
Between 2020 and 2025, the technology services sector experienced major structural shifts—from pandemic-driven digital acceleration to the disruptive rise of AI and geopolitical shifts that began to reshape traditional service models. The sector maintained a healthy growth trend in this period and played a key role to accelerate digital transformation for the global enterprise.
As we look ahead, enterprises are recalibrating their technology spend, balancing the need to modernize and innovate with the imperative to control costs. At the same time, disruptive technologies like agentic AI are emerging as key differentiators, requiring both a reimagined technology stack and a new approach to orchestrating workflows.
While India’s tech services industry will retain a relative growth edge, revenue expansion is projected to remain muted with recovery anticipated between 2027–30, yielding a 5-7% growth over a 5-year period. During this period, demand for productivity will intensify, leading to compression in some legacy service lines while expanding some segments like Data and AI segments which are expected to sustain strong growth of around 12-15%.
Some of the key observations from the report include:
- Rebalancing budgets toward AI: Enterprise tech spending will continue to be resilient, with budgets increasingly directed toward AI to unlock value creation. However, there will be wide dispersion across verticals, and few micro verticals will dominate investments. Mid-tier enterprises to accelerate tech intensity.
- Demand for bankable productivity gains to rise: In the near term (12-24 months), demand for productivity will intensify, leading to compression in current spends as providers make forward commitments.
- Expansion in addressable market with Agentic AI: $300-500 bn new spend pools can be unlocked with Agentic AI.
- Human plus AI Agent convergence: The future of tech services will be hybrid, where humans and AI agents will work together to deliver speed, scale, and trust. Together, these models will signal a new era where collaboration between people and intelligent agents becomes the default in technology services
- GCC penetration will accelerate: Shift to higher business impact and value as they emerge as innovation centres for the enterprise
Speaking at the launch of the report, Rajesh Nambiar, President, Nasscom, said, “The future of technology services will not be defined by choosing between human expertise and AI-driven automation, but by the powerful convergence of the two. Over the next three to five years, we will see an accelerated rise of hybrid teams, reshaping delivery models, productivity benchmarks, and pricing frameworks toward outcome-driven models. India is uniquely positioned to lead this shift, but it will require a fundamental reimagination and a renewed focus on reskilling and cross-skilling talent at scale.”
Commenting on the report, Noshir Kaka, Senior Partner, McKinsey & Company, said, “The global technology services market is entering a phase of both promise and pressure. Agentic AI is opening up significant new growth arenas, providing a unique opportunity for service providers to step up as true transformation partners for enterprises, helping them navigate challenges and scale new possibilities to unlock value. However, it needs a reset of the industry operating model to both counter near term headwinds and build for the AI era – Investing more in R&D to build competitive IP, reinvent existing offerings and building talent pools for new skills.”
The report articulates key imperatives for the industry – To stay ahead, the industry must defend the core with resilient offerings and upskilling, while simultaneously reinventing services for step-change productivity and pivoting to new growth arenas. Success will hinge on reimagined GTM, talent and delivery models, defensible AI platforms, and bold AI-native M&A and partnerships.
For India, this is a once-in-a-generation opportunity to retain its position as the global services capital. With the world’s largest share of tech talent, the fastest reskilling engine, and unparalleled data assets, India is uniquely placed to lead. The challenge now is to turn these strengths into breakthrough innovation, differentiated IP, and new delivery models that set the global benchmark.
