As India’s IT sector steps into 2025, cautious optimism pervades tech spending and business growth. Experts have been talking about a recovery in growth and profitability in the coming quarters, particularly in sectors like banking, financial services, retail, and healthcare. The industry is hopeful that strong client demand and increased investments in emerging technologies like generative AI, cloud computing, and cybersecurity will drive growth.
According to Sindhu Gangadharan, chairperson of the IT industry association Nasscom, the full rebound in tech and discretionary spending is expected by late 2025, contingent on stabilizing global macroeconomic conditions and easing geopolitical tensions. “2024 saw a steady but uneven recovery, with sectors like AI, cloud, and cybersecurity witnessing strong growth,” said Gangadharan. She added that businesses are prioritizing investments in AI and cloud technologies to enhance efficiency and resilience.
Generative AI, which made waves in 2024, will continue to have a transformative effect on industries in 2025. Companies are looking to leverage AI for more advanced analytics, intelligent automation, and personalized customer experiences. These developments will cause disruption in quite a few non-tech sectors as AI transforms functions such as marketing, operations, and R&D.
Puneet Chandok, President of Microsoft India and South Asia, pointed out the demand for specialized roles in AI, data science, and cybersecurity. He said the industry would focus on upskilling and reskilling the workforce to keep pace with evolving technological needs. He further predicted that Tier 2 cities would witness a rise in tech talent as companies look beyond the traditional tech hubs for hiring.
Tech mergers and acquisitions (M&A) activity is expected to remain strong throughout 2025, with big data, cloud services, and generative AI among the key areas of interest for acquiring companies. As digital transformation continues across businesses, M&A will be one of the keyways through which cutting-edge technologies are adopted and service portfolios expanded.
While generative AI deals are still few and far between, experts like Deepak Jotwani with ICRA believe this area will grow over the medium term as adoption of technologies becomes more pervasive. He also said that the BFSI sector has seen some recovery in the last few months, while other sectors like manufacturing and retail have to catch up.
The IPO market, which gained huge impetus in 2024, is already seeing a vibrant 2025, with most tech startups getting ready for their debut on the public bourses. The list includes Zepto, Bluestone, Ecom Express, and PhysicsWallah, among others, looking to tap into the continuing market sentiment.
Atul Monga, CEO at Basic Home Loan, expects funding conditions for startups in 2025 to be better than in 2024. Investors will still be cautious and would look for business models that are sustainable, innovative, and can find their way into under-penetrated markets.
2024 saw the Indian tech industry grapple with everything from public spats of high-profile founders to struggles in the business of companies such as Byju’s and Paytm. But the quick-commerce startups, Zepto and Blinkit, reshaped consumer behavior and redefined the e-commerce landscape, while established players Flipkart and Amazon have now launched new rapid delivery services.
As the year closed, regulatory scrutiny over big tech companies such as Google, Meta, Amazon, and Flipkart increased. The Competition Commission of India (CCI) imposed a massive penalty on Meta for its unfair business practices regarding WhatsApp’s update to its privacy policy, hinting at a much stronger regulatory environment in 2025.
Looking ahead, the Indian IT sector is well-placed for growth, with AI, cloud services, and M&A activities driving the next wave of innovation. Challenges notwithstanding, the focus on digital transformation, development of a skilled workforce, and a supportive regulatory environment offer a promising outlook for the industry in the coming year.
