All is not well with India’s IT enabled services industry, which is facing a GenAI adoption issue with only 40% adoption rate despite more than 80% of developers knowing its benefits, according to Boston Consulting Group’s (BCG) latest report.

GenAI is not only an efficiency tool but a fundamental Information Technology-Enabled Services (ITes) disruptor, said the report titled “The GenAI Adoption Conundrum”. If scaled properly, GenAI could unlock value equivalent to an entirely new IT industry within India’s existing ecosystem, it added.

The report suggested that Indian IT players need take actions to scale up the adoption of GenAI tools to increase productivity of their employees. As global GenAI investments surge, and countries like the US, China, the EU, and the Middle East ramp up their technology, India is at the risk of losing its leadership in the sector unless it fully integrates GenAI into its workflow, the report pointed out. 

India has been the powerhouse of global IT services for many decades, handling complex coding, software development, and digital transformation at scale. However, the IT industry faces a stark reality, relying solely on traditional methods at the time when GenAI is reshaping how software is built, tested, and deployed.    

India’s tech revenue likely to hit $300 Bn in FY2025-26

India's tech industry is expected to witness a revenue of about $300 Bn in the 2025-2026 financial year, driven by strong growth in emerging technologies like artificial intelligence (AI), cloud computing, and digital payments, according to industry body Nasscom.

The industry's revenue would grow 5.1% to $282.6 Bn in 2025, compared to 4% in the previous fiscal year. The IT sector is likely to add 126,000 jobs on a net basis, taking the total workforce to 5.8 Mn in fiscal 2025, it added.

Digital engineering is expanding into sectors like banking, financial services, insurance, healthcare, and retail, with nearly two-thirds of large deals centred on this shift, it noted.

In 2024, the industry had more than 1,750 GCCs reflecting a growing emphasis on high-value services and product engineering, it said.

Suggestions for Indian IT success  

Despite India’s growing tech industry, as per the data given above, there is slow adoption of GenAI. BCG has shared some broad suggestions for the Indian IT sector in its reports, which are regularly updated as per the changing market dynamics, focusing on how companies can capitalise on current trends.

Embrace digital transformation: Indian IT firms should focus more on digital offerings, such as cloud computing, AI, cybersecurity, data analytics, and automation. With increasing global demand, transitioning away from traditional software outsourcing models is required now.

There is also an increasing need for IT companies to move beyond just being service providers and become solution innovators, especially in ML, AI, and IoT.

Build a global talent pool: Indian IT companies must invest in developing their talent pool in advanced technologies through upskilling the existing workforce and fostering new skills. Building a global, diverse workforce can help them serve the international market and develop solutions.

Focus on strategic acquisitions: To build capabilities in high-growth areas like cloud, AI, and cybersecurity, IT firms should consider strategic acquisitions that would help them enhance their technological expertise and expand into new verticals.

They should expand their footprints in regions outside the traditional markets like the US and Europe and explore sectors like healthcare and banking.

Emphasise on industry-specific solutions: Instead of providing generic IT services, they should develop industry-specific solutions for sectors like healthcare, finance, manufacturing, and retail. This helps them create more value and differentiate themselves in the competitive global market.

Improve customer-centricity: They should move away from just executing projects and focus on building long-term relationships with clients, offering consultative services, understanding clients' strategic goals, and driving long-term value through continuous innovation.

Incorporate sustainability: As global companies are increasingly prioritising sustainability, Indian IT companies should also focus on creating environmentally sustainable solutions like adopting energy-efficient data centres, reducing carbon footprints, and promoting circular economy practices in IT hardware.

Adopting agile methodologies: To enhance operational efficiency and accelerate delivery, IT companies should adopt agile methodologies and DevOps practices across their project management. This will help them deliver products and services faster and with more flexibility.

Leverage automation for internal processes: Automation of back-office processes, project management, and customer service using AI, ML, and robotic process automation can help them drive internal efficiencies, reduce costs, and focus more on higher-value tasks.

Focus on cybersecurity: With the rise in cyber threats, IT firms must enhance their cybersecurity solutions by providing robust offerings that can help firms tap into a growing market and build a stronger relationship with customers prioritising data security.

Focus on innovation hubs: Establishing centres of innovation and research and development labs will help IT firms develop new capabilities and products. It needs to be embedded into the company culture, encouraging continuous learning and experimentation. Partnering with startups or setting up corporate venture arms can help traditional IT firms stay ahead in the race.