Fifty-Four Per Cent: The Single-Market Risk Inside India's Services Boom

India’s software exports reached $221.4 billion in FY2025-26 — and 54.1% of them went to one country. This is the same concentration risk the electronics boom carries, with a completely different asset base.

The Reserve Bank of India’s annual survey of computer software and IT-enabled services exports, released on 18 September, is the most detailed picture available of an export industry that never appears in a customs return. It shows an industry that grew 8.2% to $221.4 billion — and that is more concentrated than the headline suggests: in one destination, in one service line, and in one delivery model. Every share below is a Pheonix Research calculation from the survey’s own dollar figures; the components are the RBI’s, the division is ours.

One country, more than half

The United States took $119.7 billion of India’s software services exports, 54.1% of the total, up from 52.9% a year earlier. Europe was $70.3 billion (31.8%), of which the United Kingdom was $34.0 billion (15.4%). Asia accounted for 6.3%, Australia and New Zealand 2.5%, Canada 1.3%.

Europe is also where the policy is pointing. The trade agreement the European Union and India are due to sign on 16 December covers €67 billion of services trade between them, of which €37.8 billion is Europe buying Indian services — a route into the second-largest destination bloc that does not run through Washington. What the agreement opens, and the two exclusions it leaves untouched, is set out here.

Those shares should be read against the goods cluster we published this month. India’s electronics boom has a well-known profile: 59.9% of electronics exports are smartphones, and around 70% of handset value goes to the United States. The services industry carries almost the same concentration — but on an asset base of people, contracts and buildings rather than plants, components and freight. That changes the risk it faces. It does not reduce it.

What is actually being sold

Computer services were $153.4 billion, 69.3% of the software total, of which IT services alone were $147.0 billion (66.4%). IT-enabled services were $68.0 billion, or 30.7% — BPO services at $56.0 billion and engineering services at $12.0 billion, the latter up from $10.8 billion. The exposed line is the one that is not growing: software product development fell from $6.8 billion to $6.4 billion, from 3.3% of exports to 2.9%. India remains a services industry with a small product industry attached to it.

Delivery has also moved. Off-site delivery was 91.7% of software exports, up from 90.7%; on-site fell to 8.3%. The channel that puts Indian engineers inside a client’s building has been shrinking for years, for commercial reasons as much as political ones.

Two totals for the same industry, $25 billion apart

There is a second number for this industry, and it is larger. NASSCOM’s Strategic Review 2026 puts technology-sector exports at $246.4 billion in FY2026, up 5.6% from its restated FY2025 figure. That is $25.0 billion above the RBI’s survey — 10.1% of the NASSCOM figure on our calculation. Neither body is wrong; they are counting different things. NASSCOM’s definition spans IT services, BPM, engineering research and design, software products and hardware, and the body restated its FY2025 base upward when more firms met its reporting thresholds. The RBI’s survey measures software and IT-enabled services as they cross the balance of payments. For what India earns abroad — the thing that holds the current account level — the RBI number is the right one. For the size of the industry, NASSCOM’s is. This piece uses the RBI’s, and says so, because readers will otherwise see the two figures used interchangeably.

The buildings the exports now sit in

The other half of the services story is the global capability centres — the captive operations multinationals run in India — and their FY2026 numbers are the sharpest measure of how the industry has changed. On the Nasscom–Zinnov landscape: 2,117 GCCs across 3,728 units, $98.4 billion of revenue, 2.36 million professionals, centre count up 32% since FY2021, 506 Forbes Global 2000 companies represented, and more than 1,200 centres embedding AI and machine learning into their operations.

That $98.4 billion is not a separate industry sitting next to the $221.4 billion. Pheonix Research treats it as substantially inside the software export total, not additional to it. A captive centre billing its parent is an export of services, and it lands in the same balance-of-payments line that the RBI surveys; at 44.4% of the RBI total on our calculation, the two are the same order of magnitude, which is precisely why the distinction matters. Adding them together would count close to half the industry twice — and the two figures do get added in commentary. Our estimate rests on that definitional overlap rather than on any published split of captive from third-party delivery, and we flag it as ours.

A GCC exports a function rather than a project. That is a stickier relationship than a vendor contract — and a harder one to defend when the client concludes the function can be done by a model. The industry’s own numbers show the mix problem: NASSCOM puts FY26 revenue at $315 billion, up 6.1%, and exports at $246.4 billion, up 5.6%, but IT services — the largest line — grew 4.1%, against 7% for business process management and 7.7% for engineering research and design. The biggest part of the industry is the slowest-moving part.

The half of the services boom that is not software

It is worth stating what the software survey does not cover. At $221.4 billion it is 52.6% of India’s $421.3 billion of services exports for the year. The rest — travel, transport, financial and insurance services, education, and a large and poorly surveyed block of other business and professional services — is growing without equivalent detail. The concentration risk in software is real. It is not yet the whole of the services story.

An industry built on a cost gap and a client relationship is now being repriced by AI and re-sited by procurement. A 54.1% dependence on one market is survivable while that market’s demand grows; the same number reads differently if the work is being automated inside the client’s own GCC. India’s services exporters have one advantage the goods exporters never had — no factory to rebuild, no tariff to clear — and one disadvantage that follows directly from it: nothing they sell is hard to move somewhere else, including to a machine.

Pheonix Research covers the information technology and software industry, including the IT services segment and, within it, the India Business Process Outsourcing market — USD 48.6 billion in 2025 to USD 92.4 billion by 2033 at an 8.4% CAGR.