US$315 Billion and Rising: India s Tech Sector Expands but Market Risks Persist

Indias technology industry is set to grow again this fiscal year, but recent market turbulence has underscored that expansion is not riskfree. The industry association Nasscom said on Tuesday that the sector should expand by about 6.1% to roughly US$315 billion, driven mainly by AI services and the countrys role as a global capacity hub. Nasscom also revised upward its estimate for the previous fiscal year, increasing the sectors revenue from US$283 billion to US$297 billion. That upbeat topline outlook comes amid a more mixed picture on the ground. The broader IT and software services community is still grappling with weak demand in some pockets and the disruptive potential of more advanced AI tools. Early this month a selloff in Indian IT stocks erased about US$44 billion of market capitalization, according to Reuters, a reminder that investor sentiment can shift quickly even when revenue forecasts look solid. Large Indian IT services firms including Tata Consultancy Services, Infosys and HCLTech painted a more positive operational picture, reporting robust deal wins and signs that discretionary spending may be returning in fiscal 2027. These contract flows and renewed customer budgets have helped underpin demand forecasts and provided a counterweight to the recent market volatility. On the employment front Nasscom expects the technology sector to be a net employer this year, adding around 135,000 jobs and lifting total headcount to about 5.95 million in 2026. That would mark steady growth from 5.8 million employees in fiscal 2025 and 5.67 million the year before, reflecting continued talent absorption even as automation and generative AI reshape some roles. Investors and executives face a balancing act. The sectors shift toward AI and global delivery capabilities points to durable revenue streams, but the speed of technological change and the sensitivity of stock valuations to shortterm headlines increase the odds of episodic corrections. For portfolio managers and market watchers, the key questions are whether large vendors can sustain margin and contract momentum as pricing pressures emerge, and whether macro or geopolitical shocks could trigger deeper derating in valuations. Indias tech story remains compelling: meaningful growth, large-scale hiring and a growing role in global IT supply chains. Still, the US$44 billion equity market wipeout this month is a cautionary note growth and headline numbers matter, but market confidence can turn quickly. Stakeholders will be watching upcoming earnings, deal pipelines and the pace of corporate spending on AI to judge whether the sectors expansion can translate into steady returns for investors.