India’s technology success story has long been built on IT consulting and services, a sector that transformed the country into a global outsourcing powerhouse. However, a new assessment suggests that this dominance may now be constraining India’s participation in the fastest-growing areas of the global tech economy.

According to a report released on February 25 by Boston Consulting Group, India accounts for roughly 15–17 percent of the global IT consulting and services market a remarkable share for a single country. This segment alone represents about 83–85 percent of India’s broader technology market, underscoring the heavy concentration of economic value in one vertical.

Yet the global technology landscape is evolving rapidly. Emerging segments such as hyperscale cloud infrastructure, semiconductors, deeptech innovation, AI-native businesses, and data centres are expanding far faster and attracting disproportionate investment. The report argues that these areas not traditional outsourcing will drive the next decade of value creation.

To appreciate the scale of India’s existing base, the IT services sector currently generates roughly $300 billion in revenue, contributes around 7 percent to national GDP, produces more than $200 billion in exports, and directly employs nearly 5.8 million people. It remains one of India’s most critical engines of foreign exchange earnings and high-skill employment.

However, growth momentum has slowed. While global technology markets are expanding at high single-digit to double-digit rates across multiple segments, India’s IT services industry is growing only 4–6 percent annually. This gap reflects structural maturity as well as intensifying competition, automation, and client cost pressures.

Globally, the technology market is estimated at approximately $8.4 trillion. Within this universe, IT-enabled services account for only about 17 percent of revenues, or roughly $1.5 trillion. In other words, India dominates a slice of the market that is itself no longer the primary driver of expansion.

The report therefore calls for a strategic rebalancing toward capital-intensive, research-driven, intellectual property-led sectors. Unlike services outsourcing, these industries require long development cycles, significant upfront funding, strong domestic ecosystems, and coordinated policy support. They also carry higher risks but potentially far greater long-term returns.

Senior industry voices echo this assessment. Rajiv Gupta, Managing Director and Senior Partner at BCG, noted that India’s leadership in IT services has attracted top talent and created a global competitive advantage. However, he emphasised that the remaining $7.5 trillion of the technology industry where India is still nascent represents the real frontier.

Similarly, BCG Partner Shavi Gandhi pointed out that while India’s IT segment grows at mid-single digits, other technology areas globally are expanding at 20–40 percent annually, accompanied by strong valuation gains. This divergence suggests that India may be underrepresented in the most lucrative parts of the digital economy.

The findings align with broader policy signals from the Indian government, which has recently prioritised semiconductor manufacturing, AI development, electronics production, and digital infrastructure. However, translating policy intent into globally competitive ecosystems will require sustained investment from both public and private sectors.

From a business perspective, the shift has profound implications. Companies rooted in traditional IT outsourcing may face slower revenue growth and margin pressures as clients automate routine services using AI tools. At the same time, firms that successfully pivot toward platform development, product engineering, cloud infrastructure, and advanced analytics could capture higher-value opportunities.

For India’s startup ecosystem, the message is equally significant. Capital is increasingly flowing toward deeptech, semiconductor design, AI applications, and infrastructure plays rather than service-based models. This could reshape venture funding patterns and talent allocation over the coming decade.

For India’s startup ecosystem, the message is equally significant. Capital is increasingly flowing toward deeptech, semiconductor design, AI applications, and infrastructure plays rather than service-based models. This could reshape venture funding patterns and talent allocation over the coming decade.

Financial markets may also respond differently across sub-sectors. Mature IT services firms could be viewed as stable cash generators but limited growth stories, while companies exposed to emerging technologies may command premium valuations despite higher execution risks.