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Equirus Capital says AI will reshape delivery models, fuel M&A, and boost firms like Zomato, Paytm, and PB Fintech amid a shift to profitability.
As AI skillsets become mission-critical, IT majors are increasingly eyeing upskilling, training and certification firms in India and abroad. (AI Generated/News18 Hindi)
Artificial Intelligence is emerging as the single-biggest catalyst for India’s IT services and software export industry, with AI-driven projects projected to contribute up to 20% of total revenues by 2030, according to a new report by leading investment banking and financial services firm Equirus Capital.
The findings push back against fears that automation could threaten India’s tech workforce, arguing instead that AI is unlocking sweeping productivity gains, pushing companies toward new delivery models, and fuelling a fresh wave of mergers and acquisitions across the sector.
AI Reshapes Delivery Models, Pricing and Productivity
AI adoption is triggering a decisive shift away from traditional time-and-materials pricing toward outcome-based contracts, the report notes.
“AI tools, especially Agentic AI, are taking over tasks like testing, coding, and maintenance, leading to productivity jumps of 45–50%,” said Sandeep Gogia, Managing Director and Sector Lead – Tech and Digital at Equirus Capital.
This acceleration is prompting Indian IT firms to deepen capabilities across AI-enabled delivery, platforms, and talent; three areas that Equirus expects will dominate M&A activity in the coming years.
The report identifies three clusters driving acquisition interest:
- AI-enabled delivery: Firms are expected to buy companies with proprietary IP, automation tools, and AI-first operating models.
- AI-led platforms: Enterprise software platforms that embed AI early in their architecture are already witnessing stronger revenue momentum and higher investor appetite.
- AI talent advancement: As AI skillsets become mission-critical, IT majors are increasingly eyeing upskilling, training and certification firms in India and abroad.
Markets such as the UAE and Asia-Pacific are likely to see more deal-making due to slower activity in the US and other developed regions, Gogia added.
GCCs on Track to Become a $100 Billion Sector
India’s Global Capability Centres (GCCs) have more than doubled in size over the last five years. Equirus expects the segment to cross $100 billion by FY2030, driven by a move from outsourced delivery to in-house, high-value work.
Government policy support, expansion into Tier-II and Tier-III cities, and a steady supply of skilled talent will underpin the sector’s next phase of growth, the report said.
Digital Sector Shifts From Growth to Profit
In a parallel assessment of India’s digital economy, Equirus says the market has undergone a “dramatic reset,” with profitability now taking precedence over aggressive expansion.
“The sector has gone from ‘Growth at All Costs’ to ‘Profit at All Costs’,” Gogia said.
According to the report:
Valuation multiples have corrected sharply, from 30x to 8-10x, while burn-driven businesses have seen 50–70% valuation cuts.
Around 70% of late-stage funding is now flowing only to profitable or near-profitable companies.
Cashflow-positive IPO candidates have tripled since 2022.
Four structural factors are driving valuation premiums: stronger institutional demand for profit-making firms, retention-led revenue models, improved margins, and lower capital requirements compared to the 2019–2021 period.
AI adoption is playing a key role in improving unit economics, with platforms such as Zomato, Paytm and Rategain experiencing 200-400 bps margin expansion from AI-driven operations automation. Governance improvements are also driving meaningful valuation re-rating for companies like Zomato and PB Fintech, said the Equirus report.
M&A Accelerates as Corporates Take the Lead
India’s digital M&A activity is rising sharply, with deal volume up 40% year-on-year. Corporate balance sheets — not venture capital — now account for over 55% of deal value, as companies focus on acquiring profitable targets.
Equirus expects India’s digital capital cycle to strengthen further, forecasting over $6 billion in new equity issuance in 2026. Profitable digital firms are already experiencing 15–20% valuation upgrades this year.
Three Tech Trends to Watch in 2026
The report highlights three macro forces set to reshape India’s technology landscape:
A $200-billion productivity boost by 2030 as companies shift toward IP-led, product-first models
A Rs 12,000-15,000 crore compliance spend triggered by the Digital Personal Data Protection Act (DPDPA) 2023
Half of India’s internet users becoming voice-first by 2026, driving 25–30% CAGR in social commerce across Tier-II and Tier-III cities.
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h…Read More
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h… Read More
November 20, 2025, 16:19 IST
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