# AI and digital platforms and Software and IT services AI platforms buy software and engineering from IT firms, and IT firms resell and integrate AI for clients, but the same models can automate coding and process work; for India, whose tech industry was expected to earn about USD 315 billion in FY26 with USD 246 billion from exports, AI is both a new revenue line and a threat to the old one. Source page: https://www.materialinsights.org/links/ai-and-digital-platforms-and-software-and-it-services/ [AI and digital platforms](https://www.materialinsights.org/industries/ai_platforms/) (industry) and [Software and IT services](https://www.materialinsights.org/industries/software_it/) (industry): 4 relationships. ## How they are linked ### 1. Buys from *Physical flow · Strong · AI and digital platforms buy from software and IT services* AI and platform firms buy software licences, development, data engineering and support from software and IT service firms to build and run their products. - **₹14.8** of every ₹100 of AI and digital platforms output, all rounds (India 2022) - **₹12.4** bought directly This is the largest single input to the platform industry from another industry on the site, ahead of data centres at ₹12.8, and most of it is bought directly. Monthly US producer prices for the two barely move together (correlation of about 0.06), so the tie shows in spending flows rather than in prices. Sources: [OECD](https://www.oecd.org/en/data/datasets/input-output-tables.html); [Material Insights (World Bank, FRED, IMF data)](https://www.materialinsights.org/industries/ai_platforms/price-links/) ### 2. Industry input *Physical flow · Medium · Software and IT services to AI firms* Data labelling firms need annotation tools, MLOps platforms run on software stacks, and AI integrators rely on IT services talent, so the site lists four enterprise types in AI and digital platforms that depend on software and IT services, rated at most 3 of 5. - **4** enterprise types in AI and digital platforms that depend on software and IT services - **3 of 5** highest criticality, for data licensors and labelling firms The ratings are moderate because these inputs are available from many suppliers: annotation tooling for labelling firms, software for hosting platforms, and engineering talent and delivery for integrators and app makers. The dependence is mostly on people and delivery capacity rather than any single product, which is where Indian IT firms compete. Enterprise types that depend on it: - Data licensors and labelling firms: Annotation tooling (criticality 3 of 5) - Data, MLOps and model hosting platforms: Software (criticality 2 of 5) - IT services firms and AI integrators: Engineering talent and delivery (criticality 2 of 5) - AI applications and consumer digital platforms: App development (criticality 2 of 5) Sources: [Material Insights](https://www.materialinsights.org/industries/ai_platforms/materials/) ### 3. AI as a new service line *Transition · Rising · AI adoption creates integration work for IT firms* Companies adopting AI need data preparation, integration with existing systems and ongoing support, which IT service firms sell, so AI platforms bring new work to the services industry. - **USD 10 to 12 billion** AI revenues of India's tech industry, FY26 estimate - **over 20 lakh** of 59.5 lakh Indian tech employees upskilled in AI, FY26 AI revenue is still small, about 3 to 4% of the USD 315 billion total, and Nasscom notes that not all firms report it. The question for investors is whether this new line grows faster than AI erodes the older, labour-based work. Sources: [Angel One](https://www.angelone.in/news/economy/india-tech-industry-projected-to-reach-315-billion-in-fy26-with-ai-revenues-10-12-billion); [ETV Bharat (PTI)](https://www.etvbharat.com/en/business/india-fy26-tech-revenues-hit-usd-315-billion-enn26022404879) ### 4. Automation of services work *Substitution · Rising · AI tools can replace some IT and process services* Code generation, testing and customer-service models can do part of the work that IT services and BPM firms bill by the hour, so clients can buy AI tools instead of some services. - **6.1%** India tech revenue growth, FY26 estimate, after 5.9% in FY25 - **12,261** jobs TCS said it would cut in 2025, about 2% of its workforce - **USD 59 billion** India's BPM revenue, FY26 estimate TCS's chief executive said its 2025 cuts were about skills and deployment, not AI, so job cuts are not proof of substitution. Still, Nasscom expected headcount to grow only 2.3% in FY26, to 59.5 lakh, against 6.1% revenue growth, which is consistent with more output per worker. Sources: [Angel One](https://www.angelone.in/news/economy/india-tech-industry-projected-to-reach-315-billion-in-fy26-with-ai-revenues-10-12-billion); [Evertiq](https://evertiq.com/news/2025-07-29-indias-tcs-to-cut-12000-jobs-as-it-seeks-to-become-future-ready); [ETV Bharat (PTI)](https://www.etvbharat.com/en/business/india-fy26-tech-revenues-hit-usd-315-billion-enn26022404879) ## For investors ### Key learnings 1. AI platforms spend about ₹14.8 of each ₹100 of output on software and IT services, so they are customers of the industry as well as competitors. 2. AI revenue at Indian tech firms, USD 10 to 12 billion in FY26, is still small next to USD 315 billion of total revenue. 3. Growth of about 6% and modest hiring leave the industry exposed if AI automates more billed hours than it creates. ### What to track - **AI-related deal wins and revenue of Indian IT firms**: Shows whether AI adds more work than it removes (Quarterly · TCS, Infosys, HCLTech results) - **Net headcount additions**: Falling hiring with stable revenue signals automation gains (Quarterly · company results; yearly · Nasscom) - **Pricing of fixed-price and managed-service deals**: Price cuts passed to clients show AI productivity being shared away (Quarterly · company commentary) ## For policymakers ### Key learnings 1. India's tech exports, about USD 246 billion in FY26, rest on labour-based services that AI can partly automate. 2. Upskilling is under way, with over 20 lakh workers trained in AI, but only up to 3 lakh in advanced skills. 3. Software products were only about USD 23 billion of India's tech revenue in FY26 against USD 149 billion for IT services, so India's exposure to AI runs mainly through its services exports. ### What to track - **IT and BPM employment**: Signals the job effect of AI on a major source of urban formal jobs (Yearly · Nasscom; quarterly · company results) - **Software services exports**: Shows whether AI is eroding India's main services export (Quarterly · Reserve Bank of India) ## India Nasscom estimated India's tech revenue at about USD 315 billion in FY26, USD 246 billion of it exports, with AI revenue of USD 10 to 12 billion and 59.5 lakh direct employees. ## Sources 1. [OECD Input-Output Tables 2025 edition, India 2022](https://www.oecd.org/en/data/datasets/input-output-tables.html), OECD 2. [AI and digital platforms: materials](https://www.materialinsights.org/industries/ai_platforms/materials/), Material Insights (2026) 3. [India tech industry projected to reach USD 315 billion in FY26 with AI revenues of USD 10 to 12 billion (Nasscom)](https://www.angelone.in/news/economy/india-tech-industry-projected-to-reach-315-billion-in-fy26-with-ai-revenues-10-12-billion), Angel One (2026) 4. [India's TCS to cut 12,000 jobs as it seeks to become future-ready](https://evertiq.com/news/2025-07-29-indias-tcs-to-cut-12000-jobs-as-it-seeks-to-become-future-ready), Evertiq (2025) 5. [India FY26 tech revenues seen 6.1% up at USD 315 billion, jobs also grow: Nasscom](https://www.etvbharat.com/en/business/india-fy26-tech-revenues-hit-usd-315-billion-enn26022404879), ETV Bharat (PTI) (2026) 6. [Price correlation, Material Insights](https://www.materialinsights.org/industries/ai_platforms/price-links/), Material Insights (World Bank, FRED, IMF data)