New Delhi, Oct 28 : India's information technology (IT) sector is projected to reach $400 billion by 2030, led by firms delivering domain-specific automation that outperforms traditional service models on speed, quality, and cost, a report said on Tuesday.

The country's strong talent pool, global client trust, and cost efficiency will enable it to leverage the increased global demand for AI-driven solutions, a report by venture firm Bessemer Venture Partners indicated.

AI is automating tasks previously performed by humans and disrupting the billable-hour model that supports traditional Indian IT services, which makes deep strategic pivots crucial to stay competitive, the report noted.

The venture firm mentioned that agile, AI-native challengers are adapting more quickly to such changes than incumbent companies.

Three types of fast-moving AI-first challengers that will disrupt existing models are AI-enabled services, services built for AI, and pure software-led platforms, the report said.

The venture firm forecast that India's IT services industry will grow with margins intact despite challenges from AI-related disruptions.

It noted that three years after the launch of ChatGPT, India's IT revenues continue to climb, and margins remain surprisingly resilient because uptake of general-purpose large language models is concentrated in only two sectors- technology and media or advertising.

Incumbent IT firms continue to play a crucial role in solving complex business problems that are nuanced rather than providing one-size-fits-all SaaS deployments.

The strong balance sheets of these companies further strengthen client confidence, Bessemer Venture Partners said.

Fortune 500 companies still trust that IT services vendors can manage multi-year projects, absorb macro shocks, and deliver consistent execution, the report said.

The market capitalisation of India's top ten IT firms has more than doubled from $166 billion to $354 billion in the past decade, driven by annual revenue growth exceeding 7 per cent.

/IANS