Agentic artificial intelligence (AI) is beginning to trigger a structural transformation in India’s IT services and enterprise software landscape, according to a new thematic analysis released by Tracxn. The report, titled “India and the Agentic AI Shift: Market Signals, Funding Trends, and SaaS Monetisation,” examines how autonomous AI systems are reshaping enterprise software economics, startup formation, and long-term opportunities for India’s technology sector. 

The analysis comes amid recent market volatility that coincided with the launch of enterprise-focused agentic AI systems by Anthropic. These systems feature advanced “computer-use” capabilities, allowing AI to independently execute professional workflows across tools and software environments. Unlike traditional AI copilots that assist users, agentic AI systems can autonomously complete multi-step tasks such as documentation, analytics, compliance checks, and customer support, signalling a shift from user-operated software to intelligence-driven execution. 

India’s IT services sector sits at the centre of the transition

Tracxn noted that India’s IT services sector sits at the centre of this transition due to its long-standing reliance on execution-layer knowledge work. For decades, the industry has scaled on a labour-arbitrage model, delivering services such as compliance, analytics, testing, and operational workflows through offshore staffing. Agentic AI introduces automation directly into these service lines, challenging conventional time-and-material billing structures and pyramid-style workforce models. 

AI as general-purpose productivity technology

However, the report highlighted that the disruption is not uniformly negative. Citing the Economic Survey, Tracxn said AI should be viewed as a general-purpose productivity technology that can expand economic capacity if deployed strategically. Rather than competing in capital-intensive frontier model development, India’s comparative advantage lies in application-layer deployment, enterprise integration, and building sector-specific AI solutions. 

Structural constraints around compute infrastructure, energy availability, and access to large pools of capital make large-scale model training less viable domestically. At the same time, India’s deep engineering talent base, digital public infrastructure, and strong services expertise position it well to emerge as a global hub for AI implementation and enterprise adoption. 

India’s AI ecosystem

Funding trends underline this shift. India’s AI ecosystem saw steady capital inflows through the late 2010s, peaking at nearly $754 million in 2021, helping build strong foundations in enterprise AI and automation infrastructure. While funding levels moderated in subsequent years, recent activity points to a transition toward downstream commercialisation. 

The report also noted an acceleration in startup formation, with a growing share of new companies being designed around AI-native automation rather than traditional user-driven software interfaces. Overall, Tracxn said evolving monetisation models, changing software consumption patterns, and funding activity are early indicators of how agentic AI is gradually reshaping India’s technology and services ecosystem.