According to a recent McKinsey report, nearly 60-70% of tasks performed by IT professionals in India could be automated through AI and advanced technologies. NVIDIA CEO Jensen Huang also stated that AI tools like ChatGPT, GitHub Copilot, and Gemini will become so proficient in coding that traditional programming languages like C++ and Java may soon become redundant.
A Goldman Sachs report suggests AI could disrupt 300 million jobs globally, and the US banking industry alone is projected to cut up to 2 lakh jobs over the next 3–5 years due to AI adoption. So, is the Indian IT sector at risk?
The Evolution of the Indian IT Sector
Early Growth and Global Outsourcing Model
The Indian IT sector began in the 1980s, with major players like TCS, Infosys, and Wipro. Between 2000 to 2010, India emerged as a global IT outsourcing hub thanks to its skilled, cost-effective workforce.
Companies adopted a global delivery model:
- On-site teams at client locations (US, UK, Europe).
- Offshore teams in India for software development and support.
Cost Advantages
- Indian software development is 4–5 times cheaper than in the US/EU.
- Salaries are 70–80% lower.
- Operational costs are 3–5 times cheaper.
Economic Contribution
- In 2023, the Indian IT sector generated $245 billion in revenue (~₹20 lakh crore).
- 79% of this came from exports.
- The sector employs over 50 lakh professionals.
Performance of Top IT Companies
- TCS & Infosys: 10-year CAGR of ~11% (sales) and 9% (profits).
- LTI Mindtree, Persistent Systems, Coforge, Emphasis: Outperformed with faster growth.
- Tech Mahindra & Wipro: Underperformed in recent years.
Reasons Behind the Slowdown in Indian IT Sector
1. Global Economic Slowdown
- US & European markets are witnessing high inflation and interest rates.
- IT budgets have shrunk, delaying or halting new projects.
2. Threat of AI and Automation
- AI is replacing low-end IT jobs like software testing, data entry, and basic coding.
- An estimated 6.4 lakh low-skill IT jobs are at risk due to automation.
3. Rising Global Competition
- Countries like Vietnam, the Philippines, and Eastern Europe are offering competitive IT talent.
What Experts Say About AI’s Impact on Indian IT
Acceptance of AI as a Revolution
- HCL CEO Vijay Kumar: The traditional Indian IT model is outdated. Companies must innovate or perish.
- Infosys CEO Salil Parekh: AI is a productivity booster, not a threat.
- TCS CEO K. Krithivasan: AI will require re-skilling, potentially leading to more jobs, not fewer.
✅ Key takeaway: Indian IT leaders see GenAI as an enabler, not a replacement.
Will AI Kill the Indian IT Industry?
Let’s take a cue from the rise and fall of BlackBerry and Nokia. Both were tech leaders that failed to innovate—and lost it all. Similarly, Indian IT companies must embrace AI or risk becoming obsolete.
AI: A Threat or Opportunity for Indian IT?
The Correction in Nifty IT Index
- Nifty IT Index has corrected 20% in the last 3 months.
- Past cycle (2021–2022) saw a 30% drop, followed by recovery.
- Valuation:
- Peak: PE of 36
- Now: PE of 27
- Bottom expected: PE of 23 (another potential 10–15% drop)
Is It Time to Invest?
- AI isn’t the sole reason for the correction—slowdown in US & EU economies is a larger factor.
- Valuations are now more reasonable, presenting a potential buying opportunity.
- But be cautious—wait for clarity from future quarterly earnings.
Future Job Landscape in AI Era
While AI will automate tasks like:
- Code generation
- Testing
- Basic data analysis
It will create new roles in:
- AI development
- Cybersecurity
- Cloud computing
- IT consulting
AI can assist in coding, but human oversight is still crucial for:
- Designing complex systems
- Understanding business problems
- Client interaction
Adapt or Be Left Behind
AI is a massive disruptor, but not the end of Indian IT. Companies that:
- Invest in AI innovation
- Train their workforce
- Build proprietary models
…will thrive in the long term. Those who don’t adapt will struggle.
What Do You Think?
- Will AI kill the Indian IT sector, or will it create new growth opportunities?
- Share your thoughts in the comments below!
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