How semiconductors are becoming the next big fortune for Indian IT firms

For several decades, the Indian IT industry has been driving digital transformation for global enterprises across industries through its frugal engineering values. However, as traditional IT services reach maturity, the industry is seeking its next S-curve. As chips become the fundamental building block of every digital innovation, Indian IT companies are entering the silicon design and engineering, opening up a new, high-value, multi-year growth vector. Cloud, AI, automotive, mobility, and IoT players distinguish themselves today with custom silicon. Innovation increasingly relies on chips optimised for performance and energy efficiency, from AI accelerators to edge devices. Decades of experience in embedded systems, VLSI design, firmware, device drivers, and board validation have oriented Indian companies to move up the value chain into RTL design, design verification, design-for-test, post-silicon validation, and SoC co-design. Today, India's semiconductor ambitions are government-backed, through several incentives to support and uplift Indian self-reliance in the chip ecosystem. The Rs 76,000 crore India Semiconductor Mission, along with schemes such as Design Linked Incentive (DLI), Outsourced Semiconductor Assembly and Test incentives (OSAT), and electronics clusters, is creating long-term predictability for investments. Addressing historical barriers such as capital intensity and ecosystem gaps, semiconductor engineering has emerged as a viable and lucrative play for Indian firms. As fabrication facilities (fabs), OSAT, and electronics manufacturing take off, it is clear that this needs a massive design ecosystem. Indian IT firms are best positioned to build this rapidly, owing to their scale and engineering depth. With its large manpower, India can supply semiconductor talent on a global scale. IT outfits already employ thousands of engineers conversant with embedded systems and chip-adjacent technologies. The talent advantage India possesses positions the country as a valuable player in the global chip supply chain, and this can be stronger, making India a natural home for advanced silicon engineering through initiatives such as cross-skilling and upskilling for the engineering workforce. Silicon engineering demand continues to grow with the increasing penetration and growth of AI accelerators, EVs, 5G/6G networks, robotics, and edge devices. Firms that master chip-to-cloud engineering—integrating semiconductor, communication, and cloud—will be at the forefront of this wave. Cross-industry opportunities are creating a holistic value proposition for clients across the automotive, telecom, industrial automation, and consumer electronics sectors. To mitigate the risks of commoditised services amidst pricing pressures and fluctuating demands, IT firms moving into semiconductor engineering would help explore the larger potential value of R&D opportunities. Such diversification bolsters strategic resilience and positions firms as end-to-end technology partners in times when hardware-software integration is key. India's semiconductor market may reach $103.4 billion by 2030, buoyed by domestic consumption, global supply chain realignment, and government incentives. It also aligns with the goals of the India Semiconductor Mission and further solidifies the country's vision for leadership status as a global electronics and chip design hub. By investing in talent, infrastructure, and partnerships, they would leverage a sizeable share of this growth and position India as a global design hub for semiconductor innovation. It doesn't stop at design and validation. The semiconductor boom has also created massive IT requirements across logistics, MES, supply chain planning, and factory automation. Each advanced fab and OSAT facility requires integrated IT platforms for real-time production monitoring, predictive maintenance, and global supply chain orchestration. Indian IT firms are well-positioned to bring such solutions through their enterprise software expertise and can thus become indispensable partners in the semiconductor value chain, not just for engineering but for operational excellence. Gilroy Mathew is the Chief Operating Officer of UST