Indian IT Faces Its Kodak Moment

Generative AI is revolutionizing the IT services industry, particularly impacting India's dominant role. The technology promises significant efficiency improvements for IT firms worldwide. However, this also poses a substantial challenge to the Indian IT sector, a major export driver. The central question revolves around whether AI-driven productivity will lead to revenue expansion or price erosion. Current market trends indicate pricing pressures are already emerging, driven by increased efficiency. Industry analysis suggests a potential slowdown in growth to a modest 4-5% in the near future. This contrasts with initial hopes that AI would primarily generate new revenue opportunities. Concerns are growing amongst industry executives, deal advisors, and consultants in India. The deflationary impact of AI threatens the sector's medium-term growth prospects. The earlier optimistic views on AI's impact are being tempered by emerging realities.