India’s information technology-enabled services (ITeS) sector — particularly its vibrant MSME segment — is expected to see slower revenue growth of 7–9% in FY26, compared to 11% in FY25, according to industry estimates.
This moderation is largely attributed to global economic headwinds, cautious client sentiment, and tariff-related risks, which are likely to delay deal closures and impact discretionary spending. For MSMEs, which account for 30–40% of the ITeS industry’s overall revenue, the pressure is evident but not yet alarming, given the non-discretionary nature of most of their service contracts.
FY25: Growth driven by offshore demand and CRM strength
In FY25, the ITeS MSME segment posted an estimated ₹4.4 trillion in revenue, buoyed by increased demand from cost-conscious global clients, particularly in the first three quarters. Offshore outsourcing and process consolidation remained strong, though some slowdown emerged in Q4 as global macroeconomic uncertainties began to tighten spending.
A significant share of this MSME revenue — nearly 75% — stems from Customer Relationship Management (CRM) services. This includes:
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Inbound and outbound customer support
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Technical helpdesk operations
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Tele-sales, voice processes, and live chat
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Multilingual customer care for international markets
These CRM-driven MSMEs remain resilient due to long-term contracts, recurring service models, and stable demand from key sectors.
Sectoral demand split: BFSI resilient, others cautious
The Banking, Financial Services, and Insurance (BFSI) segment — a major client vertical — contributes over a third of ITeS MSME revenues. Growth in this area is expected to remain steady due to rising needs in:
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Payments processing and reconciliation
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Claims and compliance workflows
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Fraud detection, KYC, and AML back-office functions
In contrast, manufacturing and retail sectors, which contribute around 15–20% of total MSME ITeS revenue, are expected to face muted demand. Global supply chain disruptions, procurement uncertainties, and inventory corrections are weighing heavily on decision-making in these industries.
Also read: PHDCCI Flags AI’s Role in Retail Consumer Safety
Hiring outlook: Flat growth, skills-first strategy
On the employment front, ITeS MSMEs are expected to see 0–2% employee growth in FY26, a clear reflection of industry caution. Instead of expanding headcount, most firms are:
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Prioritising cost-efficiency and automation
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Focusing on upskilling existing talent pools
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Hiring based on specific project needs, especially in areas like
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Process automation
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AI-enabled customer service
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Analytics and data reporting
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With global clients seeking faster turnaround and highly specialised digital capabilities, MSMEs are moving towards a flexible and scalable workforce model, investing in technologies that reduce operational costs without compromising service quality.
Outlook: Time for consolidation and capability-building
Despite the slowdown, analysts believe the ITeS MSME ecosystem is still structurally robust, especially given its recurring revenue base, global client diversification, and low capital intensity.
The focus for FY26 will be on:
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Consolidating existing accounts
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Building AI and analytics capabilities
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Enhancing data security and compliance readiness
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Exploring tier-2 city delivery models for cost advantages
With macro headwinds persisting, MSMEs in the ITeS space will need to adapt fast, innovate at the operational level, and prioritise value-driven service delivery to remain competitive on the global stage.