The Indian tech startup ecosystem and Global Capability Centres are poised for a significant boost from the government which is realigning its focus on these sectors. The Software Technology Parks of India, an autonomous body under the ministry of electronics and information technology, has been tasked with supporting GCCs and tech startups, building on its pivotal role in shaping India’s IT services sector over the past three decades.
As part of its expanded agenda, STPI will soon operationalise 10 new technology parks across Tier-II and Tier-III cities, providing critical infrastructure for the next generation of tech startups. These parks will offer startups access to essential resources, including computing power, research facilities, and a supportive environment to foster innovation.
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Decentralising startup ecosystem
While India’s IT services sector has flourished, particularly in metropolitan hubs, the government is now looking to decentralise the startup ecosystem. With the establishment of STPI parks, the agency seeks to tap into underutilised talent pools in Tier-II and Tier-III cities, which hold tremendous potential to contribute to India’s tech revolution.
To further fuel this revolution, STPI is planning to expand its partnerships. This initiative comes at a time when the startup ecosystem is growing rapidly, but many ventures remain concentrated in Bengaluru, Mumbai, Hyderabad, and Delhi-NCR. By setting up parks in smaller cities like Bhubaneswar, Indore, and Patna, the government hopes to disrupt this trend. STPI currently operates 65 centres across India, with 57 of them located in Tier-II and Tier-III cities.
In recent years, India’s software and services industry has evolved significantly, driven by technological advancements, global trends, and shifting consumer demands. As a leading global IT hub, India has made strides in areas such as artificial intelligence (AI), machine learning (ML), cloud computing, and blockchain. Companies are increasingly investing in these technologies to foster innovation, boost efficiency, and gain a competitive edge in the market.
According to Gartner, a management consulting firm, IT software and services were the two major drivers of the sector in 2024. India’s IT sector exports reached approximately $193 billion in the fiscal year 2023, with IT software and services alone accounting for $126 billion. Looking ahead, Gartner expects key segments, including software, devices, IT services, and data centre systems, to continue driving growth.
Temporary setback for IT sector
Despite these positive projections, the Indian IT industry faced a temporary setback in 2023 due to broader economic challenges and slower growth in Western economies. The $245-billion industry encountered difficulties finding growth opportunities in a tough market, where progress was increasingly elusive.
As business slowed, the IT sector—one of the country’s major white-collar job providers—reduced hiring and even cut headcounts. Even industry giants like Infosys, HCLTech, and TCS had to downsize. Senior-level departures also marked 2023 as a year of disruption for the Indian IT sector. However, recovery is expected once macroeconomic uncertainties subside. With new budgets and changing market conditions, a demand recovery appears to be on the horizon.
Generative AI: The next frontier
Global IT spending is projected to reach $5.06 trillion in 2024, an 8% increase from the previous year. This surge is largely driven by the rising demand for generative AI processing, with spending on data centre systems expected to grow from 4% in 2023 to 10% in 2024 globally. In this context, STPI’s decision to support startups in artificial intelligence (AI), machine learning, and other deep-tech fields is timely.
The growing wave of generative AI has sparked optimism for IT companies. Leading firms such as TCS, Infosys, and Wipro are actively capitalising on this demand by developing specialised AI services. For example, Infosys launched Topaz, an AI-first suite of services, solutions, and platforms leveraging generative AI technologies. Wipro, in turn, introduced its Wipro ai360 innovation ecosystem, committing $1 billion to advance AI capabilities over the next three years.
As India’s reputation as a global tech hub continues to grow, alongside its vibrant startup ecosystem and technological advancements, the country is well-positioned to attract businesses looking to expand their operations. The rapid growth of GCCs presents immense opportunities across various industries, from consulting and education to finance and emerging tech. With the government’s efforts in the right direction, India is set to attract international investment and talent, solidifying its position as a key player in the global IT and services landscape.