3 weeks ago
Nuvama: Gen AI Expands Indian IT Market to $400 Billion
Indian IT companies are businesses that help other companies build and run computer systems, apps and websites.
Recently, many people worried that new artificial intelligence (AI) programs, sometimes called Gen AI, could take away the work these companies do.
A research company called Nuvama looked at this closely and said not to worry too much.
Nuvama thinks Gen AI will actually create more work for Indian IT companies over time.
According to Nuvama, the market for IT services could grow to a huge $300-400 billion by 2030.
In the short term, some IT companies might lose a little money as AI changes how work is done.
Big companies like Tata Consultancy Services and HCLTech have already won large AI contracts.
The research firm believes growth will get stronger in the next few months.
Even though IT stock prices fell this year, Nuvama thinks their prices now look like a good deal.
So overall, Nuvama believes AI is a helper, not a threat, for Indian IT companies.
Nuvama Research predicts Gen AI could expand the Indian IT services total addressable market to $300-400 billion by 2030.
Nuvama says Gen AI is not an existential threat, though IT firms may face near-term revenue cannibalisation before an inflection point.
AI adoption is shifting from pilot projects to production-scale enterprise deployments focused on measurable business outcomes.
Tata Consultancy Services and HCLTech secured large AI-led deals in Q1FY27, and Nuvama expects more such deals as adoption grows.
The Nifty IT index has fallen 16.93% in 2026, and Nuvama considers valuations highly attractive after the correction.
- Who
- Nuvama Research, an equity brokerage, and Indian IT services firms including Tata Consultancy Services, Infosys, HCLTech and Mphasis.
- What
- Nuvama predicts Gen AI will expand the Indian IT services total addressable market to $300-400 billion by 2030 and sees no existential threat from AI to the sector.
- Where
- India, in the Indian IT services sector.
- When
- In 2026, referencing Q1FY27 execution and a stronger Q2FY27 outlook, with a market expansion projection for 2030.
- Why
- Because AI adoption is moving from pilots to production-scale deployments and several large deals are entering the ramp-up phase.
Skeptical View
Nuvama's Optimistic View
Gen AI's Impact on IT Services
Skeptical View
Gen AI is feared to pressure traditional IT services revenue in the near term, as automation reduces the amount of work required for certain services, causing revenue cannibalisation.
Nuvama's Optimistic View
Nuvama sees no existential threat from Gen AI and estimates the opportunity will expand the total addressable market for IT services to around $300-400 billion by 2030.
Near-Term Outlook for IT Stocks
Skeptical View
The Nifty IT index has declined sharply by 16.93% in 2026, discretionary spending remains selective, decision-making cycles are longer, and volatility is expected to persist.
Nuvama's Optimistic View
Nuvama expects growth momentum to improve in Q2FY27 with large deals entering ramp-up phases, and finds valuations highly attractive after the correction.
Key facts
- Projected IT services TAM by 2030
- $300-400 billion
- Nuvama's stance on Gen AI
- Not an existential threat; near-term revenue cannibalisation expected
- Nifty IT decline in 2026
- 16.93%
- Large AI-led deals in Q1FY27
- Tata Consultancy Services and HCLTech
- Q2FY27 outlook
- Stronger growth expected; TCS and Mphasis cited a strong Q2
- AI adoption stage
- Moving from pilots to production-scale deployments
- Valuation view
- Highly attractive after sharp correction
Quotes
Nuvama Research analyst
Research analyst at Nuvama Research, commenting on AI impact
“We do not see any existential threat from Gen AI, but do believe that in the near‑term IT Services firms shall face cannibalisation of revenue …”
financialexpress.com
“After the sharp correction, we find valuations highly attractive.”
financialexpress.com
Sources
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