India has been one of the top global exporters of human capital for outsourcing IT-ITes (Information Technology enabled services) industry. Given unique demographic characteristics of that of availability of young talented pool of knowledge professionals in India at competitive prices, it is worth probing the effect of crucial factors on the sustainability of competitive advantage of this industry in the present turbulent global environment. This article adopts Porter’s “diamond model of national advantage” to investigate competitive advantage of India in IT-ITes outsourcing industry with an emphasis on systems approach. Dynamics among these crucial elements have been captured in terms of causal-loop diagrams (CLDs) that reinforce the fact that non-linear growth strategies for moving up the value chain and going beyond merely outsourcing services to innovative propriety products is the only remedy to sustain competitive edge in this industry. Government initiatives such as Digital India and Make-in-India campaigns work as boosters of domestic demand that lead enormous investments in infrastructure for technological advancements. Systems perspective reveals that India’s competitive edge in outsourcing IT-ITes industry would be sustained by focusing on non-liner growth and differentiation strategies with robust governmental support as cost competitiveness may no longer provide a sustainable competitive advantage.