India’s Software Services In The Age Of AI

From labor scale to intelligence scale

If you’ve grown up in India’s tech ecosystem like I have, you know how much of our identity is tied to IT services. For decades, the story has been simple: India became the world’s back-office. We wrote the code, ran the tests, managed the processes. At its peak, this industry employed over 5.5 million people and brought in more than 260 billion dollars a year.

That story isn’t ending. But it is changing fast.

AI is starting to write code, debug, take meeting notes, and even answer customer queries. The kind of work that has traditionally filled the “bench” at Infosys, TCS, or Wipro is exactly the kind of work AI is moving toward — and it is getting there fast.

So the question isn’t “Will AI hit India’s IT services industry?” The question is “How do we turn this shock into our next advantage?”

The cracks in the old model

Let’s be blunt. The pyramid model, with tens of thousands of juniors doing repetitive work, is under pressure. Microsoft says about 30 percent of its code is already AI-written. Early pilots show testing cycles cut in half. Junior roles that were once the entry ramp into IT are shrinking.

At the same time, clients are asking tougher questions: “Why am I paying per developer per month when AI can do half the job?” They don’t want headcount anymore. They want outcomes — faster collections, fewer defects, shorter release cycles.

This is where India’s services firms either reinvent or risk being disrupted.

Where the real value will shift

From scale of people to scale of agents. Instead of shadow benches, firms need reusable libraries of agents, prompts, and data pipelines. Whoever builds this “AI bench” first will own the future.

From time-and-materials to outcomes. Imagine contracts that say, “We’ll cut your billing errors by 30 percent and take a share of the savings.” That’s where pricing is headed.

From coding to governance. Europe’s AI Act is real, and India’s DPDP rules are coming. Every deployment will need audits, bias checks, and documentation. That isn’t overhead — it’s a new service line.

From projects to platforms. Clients are done with endless PPTs. They’ll ask to try an AI system in a sandbox on Monday and expect it running on masked data by Friday. Proof will matter more than slides.

Why India still has an edge

It’s easy to be pessimistic. But here’s the flip side: India is sitting on a unique opportunity.

We produce the world’s largest pool of STEM graduates. If reskilled into AI orchestration, product thinking, and security, this becomes a leapfrog moment.

We already have client trust. For 30 years, global enterprises relied on Indian partners. That trust is our passport into the AI era — if we deliver.

The government is building national compute infrastructure with 18,000 plus GPUs under the IndiaAI mission. That’s not Silicon Valley scale yet, but it’s a real start.

The question is: will our companies move fast enough to grab it?

How this plays out for people

Here’s the hard truth. The old entry ramp is narrowing. If you’re joining IT in 2025 expecting to spend six months on bug fixes and learn on the job, AI will do that before lunch.

But the new ramp is open. Skills like data literacy, secure-by-design thinking, and agent orchestration are already being paid at a premium.

Your degree will matter less than your proof. If you can show one working agent that saves a client money, that’s better than five certificates.

The scenarios I see for 2027

Over coffee with other founders, I often frame it like this:

• Conservative path: AI is treated like a bolt-on. Revenue grows slowly, margins thin, GCCs take more work in-house. India keeps running, but doesn’t lead.

• Reinvention path: Firms productize workflows, shift pricing to outcomes, and build governance into every deal. Revenue mix moves toward IP. India steps up a level.

• Disruption path: Global clients adopt agent platforms directly and bypass vendors on routine work. Only firms with proprietary platforms and compliance depth thrive.

Which one happens? That depends on whether Indian CEOs are brave enough to burn their old models before someone else does.

My take

India has been the world’s IT backbone. That was the right story for the last 30 years. The next 30 need a new one.

We cannot win on labor arbitrage anymore. AI has killed that. But we can win on intelligence arbitrage — the ability to orchestrate, govern, and deliver AI at scale, faster and cheaper than anyone else.

If we pull this off, India doesn’t just stay relevant. It becomes the world’s AI operating system.

That is the opportunity. And the window to seize it is short.