India's information technology sector is forecast to surpass $300 billion in revenue for the first time in the current fiscal year, stated the IT industry body National Association of Software and Services Companies (Nasscom), amid challenges and opportunities arising from artificial intelligence (AI).

The country’s IT sector is projected to grow by 5.1% in the financial year 2024-25 (FY25), reaching revenues of $282.6 billion, driven by easing tariff and trade tensions and rising AI investments.

The sector is expected to surpass the $300 billion mark in the upcoming fiscal, reflecting a 6 per cent rise from FY25 levels, Nasscom president Rajesh Nambiar announced at the Nasscom Technology Leadership Forum.

“This is a good outcome broadly, given everything happening around us,” Nambiar told reporters, commenting on the sector’s performance in FY25.

The tech industry’s workforce also expanded during the year, with 1.26 lakh new jobs added, bringing total employment in the sector to 5.8 million, according to Nasscom’s projections.

Despite recent stock market volatility in Indian technology shares over concerns that AI could disrupt traditional service models, industry leaders remain upbeat. They point to increasing global outsourcing, strong contract wins, and the proliferation of AI-related services as key drivers underpinning this expansion.

The Indian IT industry body expects the sector to grow 6.1% year-on-year to $315 billion in the fiscal ending on March 31, as global IT services pick up pace. Revenue growth will be similar in the next fiscal year, it stated. 

"AI is compressing traditional work but expanding other areas of work," said Srikanth Velamakanni, vice chairperson of Nasscom.

"The net balance is what you're seeing... There is not a single proposal in any tech company anywhere in the world that's going without AI in it. It is now an inevitable, fundamental part of every proposal in every company."

India's leading IT service providers, including Tata Consultancy Services, Infosys and HCLTech are hopeful about better demand in the next fiscal year.

Overall, the country's IT industry is expected to add a net 135,000 jobs in the fiscal year, taking the total headcount to 5.95 million, Nasscom said.

Among various segments, traditional IT services are expected to grow by 4.3 per cent to $137.1 billion in FY25, while business process outsourcing (BPO) revenues are set to rise by 4.7 per cent to $54.6 billion. 

The fastest-growing segment, engineering research and development (ER&D), is projected to expand by 7 per cent, reaching $55.6 billion.