Daijiworld Media Network – New Delhi
New Delhi, Feb 13: Government think tank NITI Aayog has called for a fundamental overhaul of India’s technology services industry, urging firms to pivot towards artificial intelligence-driven and innovation-led business models to sustain growth and remain globally competitive.
In a report titled Technology Services: Reimagination Ahead, released ahead of the India AI Impact Summit, the Aayog said incremental scaling of the existing labour-intensive IT services model would be inadequate in a world reshaped by AI, automation and platform-led delivery.
The report stressed the need for a decisive shift towards AI-native, outcome-linked and product-led offerings, backed by large-scale reskilling initiatives and policy reforms.
Beyond billable hours
According to the roadmap, India’s technology services sector, currently valued at around $265 billion, has the potential to grow to $750–850 billion in annual revenues by 2035, while maintaining a 7–8 per cent contribution to GDP.
However, this growth would require expansion at rates significantly higher than current trends, along with a transition away from traditional time-and-materials billing towards value-based and outcome-driven contracts.
The report noted that AI is compressing traditional revenue streams by automating large segments of software development, testing and support services. At the same time, it is creating new opportunities in enterprise transformation, agentic AI systems, cloud and data infrastructure, and software platforms.
Companies that fail to adapt risk being confined to low-margin service segments, the report warned.
Five pathways to 2035
The Aayog outlined five priority growth pathways to reposition the sector by 2035. These include embedding AI agents into service delivery, expanding India’s footprint in global software and SaaS markets, building AI-native infrastructure capabilities, strengthening research and development ecosystems, and developing technology solutions tailored to domestic demand.
Collectively, these steps aim to elevate Indian firms from execution partners to strategic transformation providers in global markets.
On the policy front, the report recommended coordinated government action to ease the transition. Key measures proposed include streamlining regulatory processes through a national single-window mechanism for tech services, enhancing the innovation and R&D framework, and expanding national skilling and reskilling programmes focused on AI-augmented roles.
It also emphasised the need for clarity on employee stock ownership plans (ESOPs) and talent mobility to support startups and product-led enterprises.
The roadmap positioned the tech services sector as central to India’s long-term economic and employment goals. It also highlighted external challenges such as geopolitical fragmentation, data localisation requirements and evolving client expectations, underscoring the need for diversification and resilience.
The report concluded that India’s global leadership in technology services cannot be taken for granted, warning that without a coordinated push by industry and government to embrace AI-led transformation, the sector risks stagnation amid rapidly shifting global technology cycles.