India's Information Technology and Business Process Management (IT/BPM) industry is presenting focused demands to the government ahead of Budget 2026, emphasizing operational clarity and capability-building support. The sector seeks measures to accelerate artificial intelligence adoption, strengthen talent pipelines, and maintain India's competitive edge in cross-border digital services.

Labour Code Clarity Becomes Profitability Priority

The most immediate concern for IT services companies centers on labour code clarity, with uncertainty translating directly into cost implications. During Q3 FY26 quarterly earnings, India's rollout of new labour codes imposed approximately ₹5,000 crore in additional costs on top IT firms as revised wage definitions inflated gratuity and provident fund payouts.

Mohit Joshi, CEO and MD of Tech Mahindra, emphasized the direct profitability impact, stating that labour code provisions require clarity for the sector. "For all the IT services companies, clearly, there was a significant provision that happened because of the labour code implications. I think it hits profitability. We're looking for a little bit more clarity on the labour code requirements," Joshi explained.

AI Adoption: From Pilots to Industrial Scale

Beyond operational clarity, the sector is pushing for policy measures that accelerate AI-led transformation across IT and BPM delivery. Industry leaders argue that AI, automation, and Generative AI are now central to raising productivity and service quality, making Budget 2026 an opportunity to support this transition.

Venkatraman Narayanan, Managing Director of Happiest Minds Technologies, highlighted the potential impact: "Policy measures that encourage adoption of AI, automation, and Generative AI across IT and BPM operations can significantly enhance productivity, efficiency, and service quality."

Akshay Chhabra, Chairman and Managing Director of 1Point1 Solutions, emphasized the shift from experimentation to deployment: "AI is no longer experimental, it is now central to productivity, decision-making, and global competitiveness." The industry seeks Budget 2026 support to move from adoption to scale through AI industrialization roadmaps.

Talent Pipeline and Skilling Initiatives

The workforce challenge is emerging as a binding constraint for scaling IT/BPM growth, splitting into two critical tracks: improving entry-level readiness and enabling mid-career transitions into higher-value, tech-led roles. Industry voices are pushing for practical interventions that reduce the time new hires take to become productive while supporting large-scale reskilling.

Kapil Joshi, CEO of Quess Corp, identified talent availability as the most critical strategic constraint as Global Capability Centers (GCCs) move toward value-driven mandates. He urged the government to prioritize structured mid-career skilling and career-transition frameworks with incentives for organizations investing in reskilling.

Achal Khanna, CEO of SHRM APAC & MENA, highlighted the gap between academic learning and workplace requirements, advocating for Budget support for structured apprenticeships and industry-linked internships to reduce time-to-productivity and training costs.

Infrastructure and Digital Public Infrastructure Expansion

The industry is seeking ecosystem-building measures beyond enterprise adoption. Nitin Chandalia, India leader for the Technology, Media and Telecommunications practice at BCG, welcomed measures that accelerate digital innovation while supporting high-value job creation.

Chandalia identified a significant platform-level opportunity: "The government could also build on the success of Digital Public Infrastructure by expanding its application beyond payments and identity to sectors such as healthcare, logistics, and manufacturing, unlocking productivity and efficiency gains."

IndiaAI Mission and Infrastructure Investment

Siddhartha Tipnis, Partner and Technology Sector Leader at Deloitte India, emphasized the need for sustained investment under the IndiaAI Mission, including sovereign and foundational AI models and democratized access to AI compute to catalyze faster enterprise adoption. He also highlighted the importance of operationalizing the National Data Centre Policy, backed by long-term tax incentives and green energy-linked schemes.

Export Competitiveness and Cross-Border Considerations

Several industry voices anchored Budget expectations in India's export competitiveness, particularly for services-led growth. Rajesh Chhabra, General Manager for India and South East Asia at Acronis, noted that services contribute nearly 50.00% of India's exports, emphasizing the need for Budget support focusing on digital and cloud infrastructure augmentation, research and innovation encouragement, and improved clarity on cross-border taxes and ESOP norms.

Reducing Operational Friction

Beyond growth enablers, the industry seeks removal of execution barriers. Leaders flagged delayed GST refunds, overlapping compliance requirements, and tax treatment ambiguity as issues creating avoidable friction, particularly for BPM companies serving international clients.

The industry's consolidated message to the government ahead of Budget 2026 emphasizes two key principles: removing factors that slow companies down and supporting elements that help them scale. This approach reflects a shift toward practical, implementation-focused policy requests rather than broad sectoral incentives.