The report notes that India’s IT revenues continue to grow even after the rise of generative AI.India’s information technology industry, valued at $264 billion, is undergoing a structural transformation that could expand its size to $400 billion by 2030, according to venture capital firm Bessemer Venture Partners (BVP) in its new report Roadmap: Reinventing IT Services in the Age of AI.
The report argues that artificial intelligence is redefining how outsourcing works, shifting value creation from labour-led delivery to automation and data-driven execution.
AI challenges the traditional outsourcing model
BVP’s analysis suggests that while India’s IT services industry has maintained its edge through skilled talent, global trust, and cost advantages, the AI era requires significant strategic change. Automation is disrupting the billable-hour model that has long underpinned the sector, as AI systems increasingly perform tasks once handled by people.Legacy firms are responding through workforce upskilling and investment initiatives — such as Wipro’s ₹1 billion ai360 programme — but structural constraints remain. Most large Indian IT firms continue to depend on time-and-material pricing, where revenue is tied to hours worked rather than outcomes achieved. This model discourages automation and innovation.
At the same time, research and development investment remains low. While global technology companies typically allocate over 20 per cent of revenue to innovation, Indian IT services firms spend less than 2 per cent, leaving them dependent on labour-based delivery.
New AI-first players emerge
BVP identifies three categories of AI-first companies that could disrupt traditional outsourcing:
- AI-enabled services, which combine automation with human oversight to accelerate delivery;
- Technology services for AI, which build data infrastructure and model operations for clients developing AI systems; and
- Pure software platforms, which automate complex workflows end-to-end with minimal human involvement.
Firms such as Graph AI and Leena AI exemplify these emerging models. These companies are building domain-specific automation that can outperform traditional service delivery on speed, quality, and cost.
Despite short-term price pressure, BVP expects AI to expand the overall outsourcing opportunity. As enterprises seek to capture productivity gains from automation, new categories of outsourced work are emerging, particularly in areas that involve complex, data-heavy processes.
Incumbents face pressure, but market growth likely
The report notes that India’s IT revenues continue to grow even after the rise of generative AI. Enterprises still depend on service providers to manage complex, bespoke business problems rather than adopting one-size-fits-all software solutions. Large firms also maintain client confidence through scale, balance sheet strength, and long-term delivery capabilities.
However, incumbents will need to disrupt their own models to stay relevant. AI-native challengers, operating with leaner teams and outcome-based pricing, have a window to capture market share by delivering faster, measurable results.
BVP concludes that AI will not eliminate IT services but reshape them. Companies that integrate automation and domain expertise are expected to lead the next phase of growth, capturing a meaningful share of the projected ₹400 billion market by 2030.
- Published On Oct 28, 2025 at 01:26 PM IST
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