TLDR: Ganesh Natarajan, former CEO of Zensar Technologies, asserts that the Indian IT industry is unlikely to regain its previous 20% growth rates in the foreseeable future. He projects an 8-12% compound annual growth rate (CAGR) for IT services over the next two to three years, attributing the shift to global trade uncertainties and the disinflationary effects of artificial intelligence (AI).
Ganesh Natarajan, a prominent veteran of the IT industry and former CEO of Zensar Technologies, has voiced a cautious outlook on the future growth trajectory of the Indian IT sector. In an interview with Outlook Business, Natarajan stated that the industry is unlikely to return to its robust 20% growth levels in the near term. He anticipates a more moderate growth phase, projecting an 8-12% compound annual growth rate (CAGR) for the IT services sector over the next two to three years. This forecast excludes growth driven by acquisitions, focusing solely on organic expansion.
Natarajan attributes this anticipated slowdown primarily to two significant factors: ongoing global trade uncertainty and the disinflationary impact of artificial intelligence (AI). According to data from NASSCOM, India’s tech sector experienced a 5.1% growth in FY25, lagging behind the global tech sector’s 10.8% growth during the same period.
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The transformative power of AI is highlighted as a key element reshaping the industry landscape. Natarajan provided a compelling example of AI’s efficiency: ‘In the old days, without AI, it could have taken six to eight months and around 14–15 people working on it. These AI specialists said, ‘We can do it in two and a half months with just two senior people, two junior people, and extensive AI deployment,’” he explained. While this translates to faster, more accurate, and highly automated solutions for clients, Natarajan warns of potential challenges for service providers. He added, ‘However, service providers will take a beating from that point,’ suggesting that increased efficiency driven by AI could impact traditional service delivery models and potentially revenue for IT firms.
