Why AI has not yet upset India’s IT industry

Mar 19th 2026|Bangalore|4 min read

This year’s edition of the annual jamboree for Indian IT firms, held last month in Mumbai, was a study in contrasts. The president of Nasscom, the industry body, hailed a new sales record: it expects that its members will have enjoyed combined revenue of more than $315bn in the year to March, up by 6% on the year before. Yet delegates tearing their eyes from the stage and glancing at their phones would see share prices plunging. The Nifty IT index dropped by around a fifth following a viral blogpost that imagined new artificial-intelligence coding tools would wipe the industry out altogether (see chart).

The case for gloom is obvious. For decades the industry has profited from labour arbitrage: the cost of hiring a coder in Pune, a city in western India, is a fraction of hiring one in Pasadena, a Californian suburb. It wasn’t just software engineers: call-centre and data-entry jobs were outsourced to India, too. IT consulting firms such as Infosys and Tata Consultancy Services (tcs) derive much of their revenue by providing customers with armies of Indian coders who perform labour-intensive tasks such as maintaining software, answering support tickets and writing routine code.