US Buys Nearly $120 Billion of India’s Software Services in FY26: What It Means for Indian IT
India’s technology services industry continued to demonstrate its importance to the global digital economy in FY26, with the United States emerging as an even larger destination for Indian software exports. According to Reserve Bank of India (RBI) data cited in a September 19, 2026 Moneycontrol report, India’s software services exports to the US increased 11% during FY26 to approximately $119.7 billion.
The figure means the US accounted for 54.1% of India’s software services exports, up from 52.9% in FY25. Overall software services exports from India rose 8.2% to $221.4 billion during the financial year.
The numbers highlight the scale of the relationship between Indian technology companies and American businesses. They also offer clues about how India’s IT services industry is changing, particularly as companies increasingly deliver work remotely from India while adapting to artificial intelligence, changing global demand and evolving immigration policies.
India’s Software Exports Reach $221.4 Billion
India’s software services industry remains one of the country's most important export-oriented sectors. In FY26, total software services exports excluding sales generated by overseas affiliates of Indian companies reached $221.4 billion, according to the RBI survey cited by Moneycontrol.
That represented an 8.2% increase compared with the previous financial year.
Sales through overseas affiliates contributed an additional $17.9 billion, showing that the international footprint of Indian technology companies extends beyond services delivered directly from India.
The United States remained the dominant destination. US-bound exports grew faster than India's overall software exports, rising 11% to $119.7 billion.
This growth increased America's share of India's software services exports from 52.9% in FY25 to 54.1% in FY26.
Interestingly, the 54.1% figure is not an all-time high within the period covered by the latest data. The US also accounted for 54.1% in FY24 before its share declined during FY25.
Why the US Market Matters So Much to Indian IT
The US has long been a critical market for Indian technology service providers.
Indian IT companies work with American clients across areas such as software development, cloud computing, technology consulting, business process services, cybersecurity, data management and digital transformation.
The latest export figures demonstrate how deeply connected the two technology ecosystems have become.
For Indian companies, the US represents a large pool of enterprise customers with significant technology spending. For American companies, Indian technology providers offer access to engineering talent, specialized capabilities and large-scale delivery operations.
The latest numbers therefore represent more than an export statistic. They illustrate the continuing importance of cross-border technology services to both economies.
IT Services Remain the Largest Export Category
The RBI survey shows that IT services continued to dominate India's software exports during FY26.
The sector generated approximately $147 billion, making it by far the largest category.
Business process outsourcing, or BPO, contributed around $56 billion, while software product development exports stood at approximately $6.4 billion.
These categories reflect the wide range of activities included within India's technology services industry.
From Traditional IT to Digital Services
The Indian IT industry has gradually expanded beyond traditional software development.
Companies now provide services across cloud platforms, artificial intelligence, cybersecurity, analytics, enterprise applications, engineering and business operations.
This diversification is important because global technology spending is changing. Businesses increasingly want technology partners that can help them modernize operations rather than simply provide additional technical manpower.
India's large technology workforce and established delivery infrastructure have helped the industry participate in this transition.
The UK Remains the Second-Largest Market
While the United States strengthened its position, the United Kingdom remained India's second-largest destination for software services.
However, the UK's share edged down slightly to 15.4% in FY26 from 15.5% in FY25.
The difference between the US and UK markets illustrates the unusually large role America plays in India's software export economy.
The concentration also highlights an important consideration for Indian technology companies: maintaining growth in the US is highly significant, but developing a broader geographical customer base can help reduce dependence on any single market.
A Shift Toward Remote Delivery
One of the more notable details in the latest data is the movement in on-site earnings.
Revenue from software services delivered on-site declined to $18.4 billion in FY26, compared with $19 billion in the previous year.
On-site services generally involve Indian technology professionals working at a customer's location overseas. Off-site services, in contrast, can be delivered remotely from development and delivery centres in India.
The decline in on-site earnings occurred even though total software exports increased.
Why This Change Matters
The numbers may indicate the continuing importance of remote delivery models in global technology services.
Modern communication infrastructure, cloud platforms and collaboration tools allow many technology projects to be managed without employees physically working at a customer's premises.
For Indian IT companies, a greater proportion of remote delivery can have implications for operating models, workforce planning and international travel requirements.
However, the RBI data themselves do not establish a specific reason for the decline in on-site earnings. It is therefore important not to attribute the movement to any single policy or market factor without additional evidence.
H-1B Policy Remains an Important Industry Issue
The latest software export figures arrived at a time when US immigration policy was again receiving attention from the Indian technology industry.
The Moneycontrol report noted that US President Donald Trump had extended by one year an order seeking a $100,000 fee for certain new H-1B visa applications. The measure was facing legal challenges at the time of the report.
H-1B visas have historically been relevant to technology companies that move specialized workers to the United States for client projects.
However, the RBI survey does not attribute the decline in on-site earnings to US visa policy.
That distinction is important. The timing of two developments does not by itself demonstrate that one caused the other.
Software Exports Grew Despite Broader Trade Tensions
India's technology exports also increased during a period of trade tensions between India and the United States.
The distinction between goods and services is particularly important here.
The tariff measures discussed in the report primarily concerned merchandise, whereas the RBI survey discussed software services. Consequently, the export data do not establish a direct connection between tariff developments and India's software export growth.
The latest figures instead show that cross-border technology services remained resilient during a period of wider economic and policy uncertainty.
What the Numbers Could Mean for Indian IT Companies
The increase in US-bound software exports could have several implications for Indian technology companies.
First, it confirms that demand from American customers remains a major component of industry revenue.
Second, faster growth in the US market compared with India's overall software exports suggests that American clients contributed significantly to the industry's expansion during FY26.
Third, the decline in on-site earnings alongside higher overall exports highlights the potential importance of delivery models based in India.
This could encourage companies to focus more heavily on capabilities that can be delivered remotely and at scale.
The Growing Importance of Technology Transformation
The Indian IT industry is also operating in an environment where artificial intelligence is changing the way technology services are delivered.
AI can automate repetitive activities, improve software development productivity and create new types of technology services. At the same time, it can change the amount of human effort required for certain traditional projects.
For Indian IT companies, the long-term opportunity may therefore involve moving from labour-intensive services toward higher-value technology solutions.
This does not mean traditional IT services disappear. Instead, the mix of services can evolve as customers seek greater productivity and faster technology implementation.
What to Watch Going Forward
Several indicators will be important for understanding whether India's software export momentum continues.
US Technology Spending
Because America accounts for more than half of India's software services exports, changes in US corporate technology budgets can have a significant effect on Indian IT companies.
Remote Versus On-Site Delivery
The relationship between off-site and on-site services will remain worth watching. A continued shift toward remote delivery could influence hiring, travel and international workforce strategies.
AI Adoption
Artificial intelligence could reshape both demand for technology services and the way those services are delivered. Indian companies will need to adapt their offerings as clients increasingly incorporate AI into their operations.
Market Diversification
The US is clearly India's largest software services market, while other regions also contribute meaningfully. Expanding into additional markets could provide Indian companies with a wider customer base over time.
FAQs
How much software services did India export to the US in FY26?
India exported approximately $119.7 billion worth of software services to the US during FY26, according to RBI data cited by Moneycontrol.
What percentage of India's software exports went to the US?
The US accounted for 54.1% of India's software services exports in FY26, compared with 52.9% in FY25.
What were India's total software services exports in FY26?
India's software services exports reached approximately $221.4 billion in FY26, excluding sales by overseas affiliates of Indian companies.
Which software services segment was the largest?
IT services were the largest category, contributing approximately $147 billion of India's software services exports during FY26.
Did on-site software service earnings increase?
No. On-site earnings declined to approximately $18.4 billion in FY26 from $19 billion in the previous year.
Is the US India's largest software export market?
Yes. The United States remained India's largest destination for software services exports, accounting for more than half of the total in FY26.
Conclusion
India's software services export performance in FY26 highlights the continued importance of the country's technology industry to global businesses. With US-bound exports reaching nearly $120 billion and America's share rising to 54.1%, the US remains central to India's technology services ecosystem.
At the same time, the broader data reveal a more nuanced picture. Total software exports increased 8.2%, IT services remained the dominant category and on-site earnings declined even as overall exports grew.
For India's IT industry, the next phase will involve balancing its strong relationship with the US against changing delivery models, evolving technology requirements and new opportunities in areas such as artificial intelligence.
The FY26 numbers therefore provide an important snapshot of an industry that continues to expand while simultaneously adapting to a rapidly changing global technology landscape.