AI to fuel India's tech services growth; public cloud spending to reach USD 17.5 bn in 2026: Report
New Delhi, July 17
India's technology services sector is expected to see strong AI-led growth, with end-user spending on public cloud services projected to surge 28.1 per cent year-on-year to USD 17.5 billion, according to Equirus Securities.
Globally, the AI boom is driving a rapid expansion of colocation data centres, with demand projected to nearly triple from around 82 GW in 2025 to about 220 GW by 2030, as per Equirus. Furthermore, "AI workloads are projected to account for around 70% of total data center demand by 2030, making access to power, advanced chips, and fast project execution the key competitive differentiators," it said.
For India, these factors are creating a positive outlook, as private equity firms are increasingly encouraging their portfolio companies to establish Global Capability Centres (GCCs), which is expanding the GCC landscape beyond large multinational corporations. Furthermore, these captive centres are being set up to strengthen capabilities in AI, engineering, product development, finance and analytics, while enhancing operational efficiency and accelerating value creation.
The report noted that India's vast talent pool, cost competitiveness and strong digital capabilities are driving this trend, with PE-backed and mid-sized companies emerging as key contributors to the country's expanding GCC ecosystem.
AI services market, on the other hand, is already gaining traction, "generating an estimated USD 10-12 billion in revenue, with nearly 25% of enterprises moving AI initiatives from pilot projects to production," the report noted.
Equirus estimates that India's technology services sector is well-positioned to benefit from growing demand for enterprise modernization, data engineering, AI governance and intelligent operations, backed by the country's large AI-skilled workforce and deep enterprise expertise.
Furthermore, public cloud spending in India is projected to grow 28.1 per cent year-on-year in FY26, with Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) are expected to lead the growth as organizations expand cloud-native and AI workloads.
"The end-user spending on public cloud services in India is projected to grow 28.1% YoY to US$17.5 billion in 2026, up from US$13.7 billion in 2025, driven by accelerating enterprise cloud adoption," it noted.
Equirus attributed AI-ready infrastructure investments, platform modernization, and production-scale AI deployments as primary growth drivers.
— ANI
Reader Comments
As someone working in a GCC here, I can confirm the AI push is real. But we need to ensure it doesn't replace jobs—it should augment them. The government and companies must focus on reskilling programs.
Ye sab theek hai, but what about data privacy? Cloud spending is skyrocketing, but we need stronger laws to protect Indian citizens' data. AI is great, but not at the cost of security. 😕
The GCC expansion is exciting—PE firms setting up AI centres will create thousands of high-value jobs. But tier-2 cities like Pune and Hyderabad should get more investment, not just Bengaluru. Balanced growth, please!
Numbers are impressive, but I hope this doesn't become another IT bubble. During the dot-com era, everyone went gaga over tech, and then came the crash. We need sustainable growth with real AI applications, not just hype. 🤔
As a foreigner working in India's tech sector, I'm amazed by the pace of AI adoption here. But we need more collaboration between academia and industry—Indian universities should update curricula to match industry needs. The potential is huge!
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.