India’s GDP is built on services, but what happens when the world stops outsourcing?
A take from Blume Ventures Indus Valley Report 2025.
For decades, India’s economic rise has been built on outsourcing.
IT, BPO, and financial services make up to 54% of GDP, with IT services alone contributing $250B+ annually - the crown jewel of our services economy.
Global firms turned to India for cost-effective talent, skilled labor, and operational efficiency.
But AI is changing the equation.
Companies no longer need to outsource work when AI can do it faster and cheaper.
Customer support, software development, data analysis - jobs that fueled India’s rise are now being automated.
McKinsey estimates that 30% of global work hours could be automated by 2030, hitting the very sectors that drive India’s economy.
The question is whether AI will disrupt India’s services-led growth; and if so, how fast and how deep?
When the world no longer needs to outsource at scale, where does India pivot?
Manufacturing? Despite PLI schemes, it still contributes only 17% to GDP, far from China’s 26%+.
AI-driven services? We have talent, but AI is an efficiency play - it creates value, not jobs.
India has adapted before - the IT boom of the 90s, the startup wave of the 2010s, the digital economy revolution post-2016.
But this time, it’s about rethinking our entire economic foundation.
What comes after a services-led economy? That’s the trillion-dollar question.