The Indian IT industry stands at a critical inflection point. So far Indian IT industry has utilized its talent pool by putting them on client projects domestically and offshore. It is just trading services. There is a need to shift to a product and IP-centered model out of India. This has become all the more necessary after the US launching its StarGate programme and the debut of DeepSeek from China.

India should focus on innovation by concentrating on increase in R&D expenditure, say in LLMs and SLMs, quantum computing and cyber security. It should allocate a higher percentage of revenue to fundamental research. The investment of global technology leaders to R&D is 15-20 per cent of their revenue. There should be collaboration between academia, industry and government institutions. The core research in India will act as an enabler to develop indigenous AI solutions. At present it is 0.7 per cent of GDP falling far behind the global average of 3 per cent. IP processes should be streamlined to provide protection of innovations. India should build up investor confidence.

There is a missing link to support investors through all stages of capital support. The startups here are supported by angels, venture capitalists and private equity. They require capital returns in 3-5 years. The focus should be on product development which should be incentivized. There should be a talent pool well-versed in cutting-edge technologies — it requires streamlining educational curricula as well as training within the company and massive reskilling and upskilling programmes. We lack entrepreneurs who will focus on deep tech and product thinking. Cities in China and organizations such as Alibaba have invested wider and deeper in AI than we have done as a nation. However, it is never too late.

The transformation is not going to be linear, but requires a through change in organizational culture (OC).