Indian IT Sector Looks to 2025 with Cautious Optimism and AI Focus

The Indian IT industry is starting 2025 with hope. The industry is expecting more spending on technology and stronger deals as many companies start using AI. Experts also think that there will be more buying and merging of tech companies in 2025, with big data, cloud services, and Generative AI (Gen AI) being the main reasons for this. Many tech startups are getting ready to go public in 2025 to benefit from the strong stock market in 2024.

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Sindhu Gangadharan, the leader of Nasscom (the IT industry group), said that the full recovery of tech spending is expected by the end of 2025. This will happen if the global economy becomes stable and world problems get better. She said that 2024 showed steady growth in tech services, especially in AI, cloud computing, and cybersecurity. Many businesses are now focusing on these technologies to improve their systems.

Generative AI, which became very popular in 2024, is expected to change many industries. It will affect marketing, business work, and research. Tech companies are offering more services with GenAI, such as smart automation and personalized customer experiences. Non-tech companies will also be affected as GenAI changes the way they work.

Gangadharan believes that businesses will spend more money on cloud services, AI, and machine learning (AI/ML) in the future. They will also spend more on better cybersecurity to keep their systems safe. Many companies are also hiring more people with skills in AI, machine learning, and cybersecurity to help with these changes.

Puneet Chandok, President of Microsoft India, mentioned that there is high demand for jobs in AI, data science, and cybersecurity in India’s tech industry. He also said that more people in smaller cities are getting tech jobs, which is good for spreading tech talent around the country.

Gangadharan expects that in 2025, businesses will adopt technology faster and spend more on IT. There will be more recovery in areas like banking, insurance, retail, and healthcare. Cloud services and AI will also help businesses make bigger deals and increase profits.

Even though Generative AI hasn’t brought in much money yet, it is expected to do so as more companies start using these technologies. Deepak Jotwani from ICRA, a ratings agency, said that the tech industry will likely see more recovery by the second half of FY2026. Sectors like banking and insurance have shown some recovery, but areas like manufacturing and retail still need to improve.

Akhilesh Tuteja from KPMG believes that companies will start spending more on technology by late 2025, especially as global businesses get better and invest in digital systems. For now, big Indian tech companies like Infosys and HCLTech have raised their sales expectations for FY25. Many tech startups are also getting ready to go public in 2025 to benefit from the strong stock market.

Companies like Zepto, Bluestone, Ecom Express, and others are planning to go public next year. Jotwani believes the IPO momentum will continue because Indian stock markets are doing well.

After a tough period of limited funding, the startup scene is seeing more deals. Atul Monga, CEO of Basic Home Loan, believes that 2025 will be a better year for funding than 2024. Investors will still be careful but will focus on businesses that are sustainable and innovative.

The tech industry in 2024 had both good and bad news. Some quick-commerce companies like Zepto and Blinkit changed the way people shop, while companies like Paytm and Byju's faced challenges. Some tech companies, like Koo (a social media app), shut down, and WazirX, a crypto platform, was part of a big scam that showed how risky tech companies can be.

Indian tech startups have also had problems with big companies like Google. Indian founders recently complained about Google removing their apps from the Play Store over a billing policy issue. The Indian government helped resolve this by getting Google to put the apps back.

India’s Competition Commission (CCI) also focused more on big tech companies. For example, the CCI fined Meta (the company that owns Facebook) for unfair business practices related to a WhatsApp privacy update. The Commission also made Meta change its policies.

Looking ahead, the rules for tech companies in India are expected to become stricter in 2025. Overall, the Indian IT sector is hopeful for the future, but there will be both challenges and opportunities ahead.

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