A few days back, the apex body of the Indian IT services companies, Nasscom, had stated that it is closely monitoring the evolving situation in parts of the Middle East. The industry body had also stated that operations across the industry are continuing as usual at this stage, while member companies remain vigilant and prepared to take additional measures as required.
Employee safety and security remain the industry’s foremost priority. As a precautionary measure, Nasscom has advised member companies to defer travel to affected areas. Member companies have also been advised to enable work-from-home arrangements for employees currently in the region. Nasscom says that it is in constant touch with the Nasscom Middle East Council and advises all employees in the region to remain in regular contact with their respective local embassies and take all necessary precautions as communicated by relevant authorities and employers.
But will the Middle East crisis and the escalating tensions in the region have a noticeable impact on Indian IT services companies? Experts point out that many Indian IT services companies, particularly those with exposure to the energy, utilities and infrastructure sectors in the region, are likely to be affected.
“Many large enterprises in these sectors rely heavily on technology partners for operations, analytics, cybersecurity and cloud infrastructure. In times of geopolitical uncertainty, organisations tend to delay discretionary technology spending and prioritise business continuity, which could slow the pace of new IT projects in the short term. Another emerging concern is the vulnerability of digital infrastructure, such as data centres and cloud facilities, in conflict zones. Reports of attacks or disruptions to technology infrastructure highlight a larger shift in the nature of modern conflicts. We are entering an era of technology wars, in which digital assets such as data centres, cloud networks, communication systems and critical digital infrastructure can become strategic targets alongside physical infrastructure,” pointed out Aditya Mishra, the CEO and MD of CIEL HR.
He further points out that Indian technology companies have a strong operational presence across the Middle East region through offshore development centres, delivery hubs and client-facing teams. Many Indian entrepreneurs and technology professionals based in hubs such as the UAE are working remotely and being cautious. Employers are actively coordinating with their employees in the affected area to ensure their safety.
“Over the longer term, such developments may also increase demand for cybersecurity, resilient cloud architecture and distributed technology infrastructure. While the crisis could create short-term caution in technology spending, it may simultaneously accelerate investments aimed at building more secure and geographically diversified digital systems,” added Mishra.
Adversity creates opportunities. The present situation could be something like that. “The Middle East wanted to be the 3rd hub for AI and data centres after the USA and China. The investment commitment was upward of $ 2.5 Trillion across the region. Data centres were getting built to serve the Asian region and parts of Europe. Building a data centre or AI-related capabilities will have their own ancillary support companies that get built. IT companies, especially from India, play a huge part in that and especially with the bonhomie India has with the Middle East. However, what was moving towards centralisation will possibly move towards decentralisation. There will be multiple hubs across geographies built, which will still need support. In the short term, the conflict may create issues, but in the long term, this could be a blessing in disguise and more democratisation,” Sathya Pramod, the founder of KayEss Square Consulting Pvt Ltd, told THE WEEK.
As per a recent report by the International Data Corporation (IDC), the escalation of conflict in the Middle East introduces a new macroeconomic and geopolitical variable into an already fragile global technology environment. Based on early regional intelligence and IDC’s macroeconomic modelling framework, the IDC has seen six primary impact vectors on IT spending: energy price volatility, cloud and data centre resiliency, sovereign infrastructure acceleration, cybersecurity, supply chain, and shifts in consumer and enterprise investment sentiment. The IDC report says that given the early and rapidly developing nature of this situation, its scenario analysis and forecasts a war limited to the Middle East, which lasts for less than 3 months.
The report says that in case the Middle East conflict lasts for up to 3 months, the impact on IT spending would be measurable but relatively moderate. Service providers are likely to maintain aggressive investment plans for AI infrastructure deployment at a global scale, even in the context of a weakening macroeconomic environment. A relatively short conflict would have a limited impact on demand for cloud services and enterprise software, but returning inflationary pressures could put a drag on device upgrades and some discretionary spending.
In this downside scenario, global IT spending would grow by around 9 per cent in 2026, versus IDC's baseline forecast of 10 per cent growth. A longer conflict would have a more pronounced impact on IT spending, but it is currently more difficult to predict.
As per IDC, IT spending in the Middle East and Africa region (MEA) was $155 billion in 2025, representing 4 per cent of the global market, and is currently forecast to increase by 5 per cent in 2026. As per the report, it is lower than global growth, due to memory price pressures on device markets, which make up a larger share of IT spending in the region.
The report observes that in a downside scenario where the conflict is resolved within 3 months, IT spending growth in MEA would fall into the range of 3-4 per cent this year, with negative implications for business and investor confidence in the short term. The impact at the country level would be extremely mixed, reflecting oil supply dynamics and other factors. A longer conflict would have a greater impact.
Experts such as Alok Shende of Mumbai-based Ascentius Consulting do not anticipate any cataclysmic impact for the Indian IT services companies. “The Middle East is not a major IT hub. Most IT services that get implemented are in the offshore centre, for example, in India. Granted, there will be some enterprise software like SAP, but the chances are again marginal. Why? Because they have been implemented a long time ago. Of course, there will be some other categories of projects, but that again will be on the offshore model,” remarked Shende.
