AI to fuel India’s tech services growth; public cloud spending to reach $17.5 bn in 2026: Report

NEW DELHI: 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)