Gen AI won’t come to IT sector’s rescue, not yet
NEW DELHI : Generative artificial intelligence, the biggest buzzword in enterprise technology this year, will not be a factor helping India’s $245-billion information technology services industry return to revenue growth in the ongoing quarter or the next. In fact, gen AI’s contribution to the overall revenue of India’s top IT services firms is expected to be less than 1% despite an increasing number of pilots and partnerships in this emerging technology, say industry experts. This is not entirely unexpected.
Generative AI is still in its infancy, and has failed to translate to large deals and projects, at least not yet. Revenue growth for IT services companies in the December quarter is expected to remain muted as clients across sectors continue to be conservative in spending on technology. “The overall scale of AI deployments across sectors and types of technologies such as cloud and blockchain is quite strong.
However, generative AI’s contribution as part of it remains small for the time being," said Apurva Prasad, vice-president of institutional research at HDFC Securities. Adding to this were global economic concerns and weak overall demand. “There is a slowdown within the US economy, which may extend into the next calendar year—that’s certainly of concern.
The risk of recession is not gone either, and none of these scenarios are likely to change," Prasad said. “Some sectors such as banking and financial services may see some relief since interest rates have relaxed. These will offer tactical factors that may make the market look a little more favourable for the service providers, but those are more driven by rates.
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