As one of fastest-growing economies in the world, India is home to a dynamic and booming Information Technology (IT) sector. On top of strengthening its decades-long position as a hub for providing cost-effective onshore and offshore IT services, the adoption of cutting-edge technologies coupled with a thriving ecosystem of 100,000+ startups continues to propel the growth of India’s IT sector. As a result, the revenue from India’s IT services market is projected to grow from 26.73 billion USD in 2024 to 44.02 billion USD by 2029 (at a CAGR of 10.49%).
Powered by automation, big data analytics, cloud computing, and AI adoption, organisations are increasingly looking to optimise their workforce, modernise legacy applications, and leverage the latest technologies to elevate their customer experience. To accelerate digitalisation across the board, 90% of organisations in India have focussed on increasing their technology spend in 2024. On top of additional investment, the ability to attract, upskill, and retain top-notch IT talent has become all the more critical in boosting innovation, driving scalable business growth, and bolstering future-readiness.
Within the technology sector, India’s local talent pool is the plug and play solution that every company needs – ready to code, scale, and innovate on demand.
Looking ahead, here are some of the key trends that are impacting India's IT labour market.
1. Government-Backed Programmes are Accelerating the Enhancement of Local IT Capabilities.
The Government of India has launched a series of flagship digital programmes over the years to increase investment, empower entrepreneurship, and support IT talent development across the country. Pioneering initiatives include Digital India, Make in India, and Skill India, which focus on accelerating digital transformation across a myriad of sectors and empowering local talent to be at the forefront of technology adoption and innovation. In addition to these initiatives, the Government has ramped up investment into cybersecurity, hyper-scale computing, AI, blockchain, data centre operations, and 5G technologies – acting as a major catalyst behind the rapid YoY growth of India’s IT sector. Taking AI as an example, the Government allocated an investment of 1.2 billion USD to strengthen India’s AI capabilities through the flagship IndiaAI Mission.
2. The Demand for High-Calibre Talent with Expertise in Modernising Legacy Applications is Greater than Ever.
Revamping and modernising legacy applications remains the topmost digital transformation priority for over 32% of organisations in India. Be it upgrading existing platforms (both customer-facing and internal) to boost their scalability and performance or migrating systems from on-premises to cloud-enabled environments, modernisation initiatives are no longer a luxury, but a necessity. To navigate the complexities involved in running these business-critical programmes of work, organisations are desperately looking for technical and functional SMEs who have the right knowledge and replicable experience in shifting from legacy code to the latest technical stack. As a result, cloud computing, DevOps engineering, test automation, and big data engineering are among the most in-demand skillsets within India’s IT labour market.
3. India is Rapidly Emerging as a Global Hub for Semiconductor Manufacturing.
Driven by technological advancements and the rising demand for electronics across both established and emerging sectors, India is poised to become a global leader within the semiconductor manufacturing space. With a Production Linked Incentive (PLI) Scheme of 10 billion USD, the India Semiconductor Mission has been established to further strengthen the country’s footing as a trusted partner within the global electronics and semiconductor supply chain. The likes of Foxconn, Applied Materials, Micron, PSMC, and Tata Electronics are also building dedicated semiconductor manufacturing plants in India, which could create significant employment opportunities and incentivise more foreign direct investment. While this sector is undoubtedly on an upward trajectory, it is important to address the shortage of skilled local talent in the very-large-scale integration (VLSI) space and IT talent who understand the semiconductor domain. Upskilling and talent development programmes, designed by the likes of All India Council for Technical Education (AICTE) and University Grants Commission (UGC) in collaboration with semiconductor firms, are steps in the right direction to uplift the skills and competencies of Indian talent within this sector.
India stands at the forefront of the global semiconductor revolution, poised to lead the future of chip design and manufacturing. With access to an unparalleled young workforce, strategic investments, and a commitment to innovation, India is being positioned as a powerhouse in this critical industry, driving progress not just locally but for the entire world.
4. Boosting Automation and Driving Process Efficiencies Continue to be at the Forefront of Boardroom Agendas.
Automation tools and technologies have gained prominence over the past few years, as organisations look to streamline their operational processes, particularly those involving heavy manual inputs. For example, chatbots have become increasingly common in enterprises that need to cope with high customer support volumes. The rise of artificial intelligence (AI), though, has been a game-changer, with most businesses either exploring or already implementing different use cases, particularly within Generative and Conversational AI. Be it providing real-time intelligence to help sales representatives, helping product managers in customer-centric decision making, or assisting back-office teams to perform manually-intensive tasks, the applications of AI are transcending boundaries. Unsurprisingly, over 46% of organisations in India consider AI, along with machine learning, as the most critical skill needed within their IT workforce.
5. Evolving Customer Expectations are Prompting IT Service Providers to Elevate their Game.
As businesses look to do more with less, the onus is on IT service providers to diversify their offerings and maximise value addition. On top of deploying top-notch IT talent, staffing firms are expected to provide a high-touch, post-placement service to maximise retention and facilitate effective knowledge management and talent upskilling – both in terms of technical knowledge and soft skills. On the IT services front, companies are expecting their vendors to own the end-to-end solutioning within their flagship programmes of work and provide the right subject-matter expertise to drive cutting-edge innovation at scale and speed. Time is of the essence, as IT staffing and services firms adapt, evolve, and elevate the quality of their services, while optimising costs and mitigating risks of their end-customers.
India’s IT market is vast in size, with a plethora of underlying growth opportunities and high-calibre IT talent to unlock them. Amidst cut-throat competition, organisations that remain agile and responsive to change, accelerate technology adoption, and drive automation at scale will emerge as the trendsetters of tomorrow.
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