Why Indian IT firms dread US economic uncertainty

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Let the good times roll: IT services eye a better future That segment has since recovered, and some banking sub-segments have recovered enough to increase their tech spending. Infosys chief financial officer Jayesh Sanghrajka told analysts last month that the company saw a recovery in areas such as mortgages, capital markets and card payments. Infosys reported its first sequential growth in this segment in six quarters.

However, for the top five companies, the share of banking and finance has shrunk year-on-year. It's expected to improve as spending picks up, which is likely to happen in phases. TCS chief executive officer K Krithivasan sees increased spending on security, risk and regulations in the near term, and on integrating cloud and artificial intelligence (AI) in the longer term.

Ever since the launch of ChatGPT in 2022, the commentary on AI has been overwhelmingly positive in the US. Venture capitalists (VCs) have continued to pour billions of dollars into AI startups, more than doubling their investments year-on-year to $24.1 billion in the June quarter. Microsoft's investment in OpenAI is estimated to be about $13 billion.

Also read: Gen AI pushes global firms to pour money into hardware upgrades However, there have been questions of late about returns on these investments, and speculation that AI might turn out to be another bubble. How AI evolves is important for Indian IT firms, which have invested time and effort in upskilling employees to ride on the wave. One reason why returns on AI are not evident yet could be that it's still being deployed.