India’s $200 billion IT services industry, the backbone of its current account surplus and a pillar of its economic rise, could face severe disruption by 2028 as artificial intelligence sharply reduces the global demand for outsourced coding, according to a research report released in February.
The report, “The 2028 Global Intelligence Crisis,” was published by Citrini Research and outlines a rapid adoption scenario in which AI coding agents perform many routine software tasks at a marginal cost close to electricity and computing power. Such a shift, it says, would undermine the labor-cost advantage that has defined India’s technology exports for decades.
India’s IT services sector exports more than $200 billion annually, making it the single largest contributor to the country’s current account surplus. That surplus has consistently offset India’s structural goods trade deficit, driven by imports of oil, electronics and industrial inputs.
The industry’s core model has relied on Indian developers costing a fraction of their American counterparts. The report argues that if corporations replace portions of their outsourced workforce with AI systems capable of generating, testing and maintaining code, pricing power across the sector could erode quickly.
Under its stress scenario, major firms including Tata Consultancy Services, Infosys and Wipro could face accelerating contract renegotiations and cancellations through 2027. A sustained slowdown in services exports, it says, could narrow or eliminate the surplus that anchors India’s external accounts.
The report models the possibility of sharp currency pressure if investor confidence weakens. In a rapid adjustment scenario, it projects the rupee could fall steeply against the U.S. dollar over a matter of months as capital flows shift and export earnings decline.
It also raises the prospect that, by the first quarter of 2028, India could enter preliminary discussions with the International Monetary Fund if external balances deteriorate and reserves come under strain.
The report does not present the scenario as certain, but as a risk tied to the pace of AI deployment and the speed at which India’s IT sector adapts.
Indian officials have emphasized efforts to broaden the country’s technology base, including semiconductor incentives, digital public infrastructure and domestic AI development. Industry executives have argued that demand for higher-value services such as cybersecurity, data governance and complex systems integration will persist even as routine coding tasks become automated.
Still, the projections have drawn attention in policy and financial circles because of the scale of India’s exposure. With services exports forming the primary buffer against its goods deficit, analysts say the country’s external stability remains closely linked to how quickly its flagship IT industry can adjust to a rapidly falling cost of artificial intelligence.