ING: India's software services exports have risen to ~5.2% of GDP from 3.3% before the pandemic, as AI pushes the country's IT industry toward higher-value work
Context & Ripple Effects
India's technology-sector outlook had already been improving in 2025, when Nasscom projected software-export growth alongside faster overall sector growth. That expansion sits against a longer-running warning that clients would automate BPO and other repeatable outsourcing work.
The tension is employment: the sector's 6 million-person workforce was reported to be shedding jobs as AI automates formulaic tasks. ING's framing suggests export growth and workforce growth are becoming less tightly linked as providers concentrate on work that is less readily automated.
First-order effects
- Indian IT providers have a larger export base relative to the domestic economy, while AI shifts their service mix away from formulaic delivery and toward higher-value engagements.
- Entry-level and repeatable-task roles face greater pressure at providers already adjusting staffing as automation takes over formulaic work.
Second-order effects
- Enterprise clients that use Indian vendors gain an incentive to reserve outsourced spending for more complex services while automating standardized processes internally or through AI-enabled offerings.
- Indian providers must compete less on labor volume and more on their ability to package AI-enabled, higher-value services, raising the importance of skills and delivery capabilities over headcount.
Third-order effects
- If export growth continues alongside automation-led job reductions, India's services model may generate more economic output with fewer entry-level pathways into the IT workforce.
- The outsourcing industry is shifting from labor-arbitrage delivery toward a more polarized structure: automated routine work at one end and specialized services at the other.
The trend: AI is changing Indian outsourcing from a scale-of-labor export model into one where higher-value services carry more of the sector's growth.