In 2025, Indian IT industry makes a come back

Indian IT services industry has gone through many cycles in 2025. At the start of the year, most analysts predicted that IT services companies would face severe headwinds as AI would eat most of their service-led offerings.

As we stand at the verge of entering into 2026, many of them are of the opinion that the Indian IT firms are coping up well with the ongoing AI wave and can be good bets for investment next year. Now, what has happened in the last 12 months to make such drastic shifts? And the reasons are many.

Firstly, global AI-heavy companies like Nvidia, Meta, Microsoft, Google, OpenAI and many others are facing investors’ rising question marks with regard to return on investment. Though billions of dollars have been pumped in by these companies for developing AI-led platforms, data centres and related infra; returns on these investments are yet to show up on their earnings.

In 2025, consumer adoption of AI has gone through the roof. AI tools are being used more frequently, showing a lot of promise for AI platforms. However, enterprise adoption has been slow. Companies are weighing all options before going full throttle on replacing their existing systems.

Notably, unless enterprise adoption grows, getting back the huge amount of investment will be difficult to get back. Secondly, Indian IT companies have again showed that they are resilient to market shocks. While AI-adoption is cutting into existing revenue sources, Indian IT companies are successfully creating more revenue sources through higher number of projects.

It means AI is enabling them to get more projects, albeit smaller. During the second quarter of earnings of FY26, it has been seen that revenue growth of most big and mid-tier IT firms has stabilised a lot. From unpredictability, earnings have received some bit of stability now. That is good news for the whole IT industry.

Like last year, Nifty IT Index continues to be a laggard as compared to other sectoral indices in 2025. However, investors are increasingly finding comfort in IT stocks as uncertainty attached with AI reduces. Hiring numbers of Indian IT firms have also improved in 2025 as compared to 2024.

As hiring is considered as one of the leading indicators of growth prospects, this definitely augurs well for the Indian IT industry. Now, many analysts feel that Indian IT companies are likely to get more AI-related services projects as AI infra phase peaks.

Clients need the help of IT services companies in implementing AI-led platforms and services and this is where, demand will come up in coming years. Meanwhile, GCC (Global Capability Centre) ecosystem in India continues to grow at a sound pace.

2025 saw opening of many such centres by foreign firms. Interestingly, GCCs have emerged as the new engine of technology hiring in India. Despite Trump administration’s punitive tariffs on India and tightening norms with related to h1B visa programme, Indian IT industry has again shown that it has the capacity to change according to market dynamics.