Analysts at Anand Rathi have signalled that artificial intelligence (AI) — particularly generative AI and automation — could become a meaningful revenue driver for Indian information technology companies from the financial year 2026–27. The observation comes as the sector seeks fresh avenues for growth after several years of slower expansion.
Why this matters now
India’s IT industry is one of the country’s largest employers and a major source of export revenue. For readers outside India, the sector is relevant because it supplies software, services and technical labour to global corporations across finance, retail, healthcare and public services. Any structural shift in how Indian IT firms grow and price their services therefore has implications for international buyers, cloud vendors, global labour markets and investors.
Anand Rathi, a financial services and advisory firm in India, has flagged AI as a potential inflection point. The firm’s note—reported in Indian press—links faster adoption of AI technologies with renewed revenue momentum for outsourcing and software services companies. That could change how projects are scoped, the types of skills in demand, and the profit margins firms can register.
What AI adoption could change in India’s IT model
Indian IT firms historically grew by offering labour-intensive services: application development, maintenance, systems integration and package implementation, often priced per person or per hour. AI tools—especially large language models and automation platforms—can alter that dynamic in several ways:
– Shift from human-hours to outcomes: Clients increasingly ask for delivered business outcomes (for example, faster customer-response automation) rather than paying for teams of developers. AI can enable firms to deliver those outcomes more efficiently, changing billing models.
– New service lines and intellectual property: Firms can build AI-enabled products, platforms and proprietary models that can be licensed or sold, rather than only selling time and expertise.
– Reskilling and talent mix: Demand may rise for data scientists, prompt engineers and cloud specialists while routine coding and testing roles evolve. That affects hiring, training and campus recruiting strategies.
– Vendor relationships: Wider adoption of cloud and specialized AI infrastructure could strengthen partnerships between Indian IT firms and hyperscalers (companies such as Amazon Web Services, Microsoft Azure and Google Cloud).
Anand Rathi’s view, as reported, is that these shifts start to have a discernible revenue impact in FY27. It is important to note that such timing is an analyst projection and not a guaranteed outcome; the pace of adoption depends on client budgets, regulatory responses, data governance rules and the technical maturity of AI deployments.
Risks, regulation and operational questions
The integration of AI raises several unresolved questions that will shape outcomes for Indian IT companies and their overseas clients. Data privacy and cross-border data flows are pressing concerns: many corporate customers and governments demand rigorous controls on training data and model outputs. India itself is in the process of designing regulations for digital ecosystems and AI; how these rules evolve will affect outsourcing arrangements and model hosting decisions.
Operational risks include model reliability, explainability and the need for human oversight. Clients often require guarantees around compliance, auditability and the absence of bias in AI-driven decisions. Indian firms will need to build governance frameworks and possibly new insurance or contractual arrangements to address these concerns.
For international buyers, the move to AI-enabled outsourcing could mean faster delivery and new capabilities, but it also necessitates fresh vendor due diligence: verification of data handling practices, model provenance and post-deployment monitoring.
What investors and global customers should watch
If AI does become a growth pillar as projected, several indicators will be useful to watch in company reports and market activity: revenue mix by service type (products and platforms versus traditional services), margins on AI-enabled contracts compared with legacy contracts, hiring trends toward data and cloud skills, and the scale of client investments in AI pilots versus production deployments.
Investors will also follow capital spending patterns—for instance, whether firms invest more in cloud partnerships, proprietary model development or specialized AI engineering centres. For multinational clients, the pace at which pilots convert into large-scale implementations will be a practical signal that AI is moving from experimentation to mainstream outsourcing.
Finally, readers should remember that analyst views are one input among many. The timing and scale of AI-driven growth in India’s IT sector will depend on technological progress, client acceptance, regulatory clarity and global economic conditions. Anand Rathi’s projection that FY27 could be a turning point is an important indicator, but not a definitive forecast.
This article was produced with AI assistance and checked before publication. Editorial policy
