'As AI grows, legacy will compress'

Noshir Kaka, senior partner, McKinsey & Company. Rather, he says that disruption led by artificial intelligence (AI) will create a $15 trillion opportunity. In an interview with Shivani Shinde on the sidelines of the Nasscom Technology Leadership Forum, he talks of the shift for IT tech services. Edited excerpts:

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The information-technology (IT) services industry has a long way to go, says Noshir Kaka, senior partner, McKinsey & Company.

You are saying the AI-led opportunity for IT services is $200 billion-300 billion. Where is this opportunity coming from?

■ When we talk about tech services, the addressable market is roughly $3 trillion globally — insourced, outsourced, onshore, and offshore — everything combined. Of that, we address about $280 billion. Next to that is the software market, which is another $2 trillion. With AI-led services, we can now also go after that segment. So, $3 trillion plus $2 trillion gives us a $5 trillion combined opportunity.

Now look beyond tech. Consider all professional services globally — doctors, lawyers, consultants, investment bankers, and journalists — any high-skilled, domain-intensive job. In each of these professions, 30-40 per cent of the tasks are repetitive or administrative, and can potentially be automated.

If AI can automate 20-40 per cent of these, that represents another $15 trillion opportunity.

So, from $3 trillion in tech services, to $5 trillion including software, and another $15 trillion from automating parts of high-skilled jobs, the new addressable market for tech services is $300 billion-400 billion.