AI To The Rescue?

Headwinds loom for IT but AI sparks hope in an uncertain year

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The Indian IT sector stands at a crossroads in 2024, echoing the early 2000s when Y2K sparked a transformative tech revolution. Today, Artificial Intelligence (AI), propelled by generative models like ChatGPT, emerges as a similar force with the potential to reshape the coming decades.

While 2023 saw record deal wins for top firms like TCS, Infosys, HCLTech, Wipro, and Tech Mahindra, it was also marked by a slowdown and revenue uncertainties.

A defining feature of 2023 was the wave of leadership changes across major players. Ravi Kumar S, formerly Infosys President, took the reins at Cognizant, while TCS saw the departure of CEO Rajesh Gopinathan, and Tech Mahindra appointed Mohit Joshi as its CEO. This reshuffle wasn’t limited to CEOs; CFOs and other key decision-makers also jumped ship, further highlighting the dynamic landscape of the industry.

With fresh leadership at the helm, the sector appears poised for a reset after one of its weakest years since 2008, according to analysts and industry insiders.

Despite record deal pipelines, 2023 was defined by anxieties around revenue growth and a cautious hiring slowdown that impacted both freshers and lateral hires. Major players like TCS, Infosys, HCLTech, and Wipro collectively shed 5% of their workforce (39,000 employees) in the first half of FY24, prioritizing internal resource optimization.

This workforce contraction stood in stark contrast to a record-breaking quarter deal total contract value (TCV) achieved by top IT companies, namely, TCS, Infosys, HCLTech, and Wipro, with TCS even revising its guidance upwards.