If you worried AI might gut India's outsourcing machine, ING Bank NV says not so fast. The country is moving up the value chain into work that algorithms struggle with, which is helping demand hold steady. Software services exports now make up about 5.2% of GDP, up from roughly 3.3% before the pandemic, and business services - spanning finance, accounting, engineering, research, and analytics - now sit near 3.3% of GDP.
The mix is changing. Tasks like data entry, document checks and customer support are giving way to higher value work such as analytics and software development. Furthermore, clients are placing strong orders for capabilities in managing risk, producing engineering designs, and carrying out research and development. Put together, software and business services exports equal about 8.5% of GDP and bring in critical foreign exchange.
India commands a majority slice of the world's outsourcing market and earns roughly $205 billion each year from software services exports, supporting around 5.8 million jobs, according to ING. "AI disruption fears look premature in India and the Philippines," said Bharghava, the head of ING's Asia-Pacific research. "The evidence points to adaptation, not decline. AI is reshaping what gets outsourced, not shrinking demand for it." India's digitally delivered services exports have risen 45% since 2022, outpacing the global increase of 32%, which means the country has been gaining share.
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The work flowing to India is getting more specialized, not disappearing. That points to a longer runway for services tied to analytics, engineering and software development - the kinds of capabilities that companies still need to buy, AI or not. It is a reminder that when tech shifts, the winners often are the ones moving up the stack.
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