Gen AI unlikely to bail out IT services firms: experts

Its contribution to overall revenue of top IT services firms is likely to be less than 1%

- Shouvik Das 

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.