The spectre of AI is staring Indian IT in the face
His comments came after Hexaware slipped two places in the Indian IT pecking order to No.10, ending the June quarter with $382 million in revenue, up 2.8% sequentially.
'On the negative side, I think there will be some compression in IT operations when new deals are done or when deals are renewed. There's some compression in software development as a consequence of AI," Ramakarthikeyan said on Friday.
New opportunities
Still, he said AI is going to create new revenue, even as the negative impacts are not 'significant enough." 'On the other hand, I think AI is going to unleash a number of new revenue opportunities for our business. The first and foremost is data," he added.
Hexaware is not the first to note the impact of disruption. GenAI's impact will be the highest in business process outsourcing, HCL Technologies Ltd MD and CEO C. Vijayakumar said at an event two years ago. "Second will be application development, as the role of Gen AI was minimal here. Application and infrastructure operations, incremental benefit would be marginal," Vijayakumar had said. While Gen AI was not depressing prices for existing services, it could start in 2024, Vijayakumar had said then.
In February this year, he said HCL Tech has been trying to "deliver twice the revenue with half the people."
Reshuffles
While AI isn't currently changing staffing, future AI-powered coding may shift Hexaware's needs from junior staff to those with specialized knowledge, leading to minor workforce adjustments, all within the context of a global talent shortage," Ramakarthikeyan said. 'So, there could be marginal reshuffling, but that's what it takes to deliver service."
"We also believe that AI/Gen AI will lead to compression of revenue for the industry in the next 24-36 months as companies self-cannibalize to hold on to their existing clients," Girish Pai, head of equity research for Bank of Baroda Capital Markets wrote in a note dated 26 July.
Companies will look to achieve more with fewer people, an analyst said.
'It is very possible that a 1,000-person IT services startup using AI could achieve $1 billion in the next five years," said R. Wang, founder of Constellation Research. He said IT outsourcers may adjust headcount going forward.
Recalibrating
'Expect more reductions over time as these tech majors have to recalibrate their workforces and also adjust to changing client expectations. We are in the midst of a massive transition that will transform white-collar work as we know it," Wang added.
The Big Five of Indian IT reported revenue growth of 15-25% in FY22. Three years later, growth slowed to 3.8-4.3% for the full year, and two of them saw a revenue decline.
At least one has analyst called out this trend in the past.
"In particular, we believe that renewals will be challenging since customers will seek, and likely get, lower renewal prices than historical norms as the power and capabilities of generative AI increase," said Keith Bachman, an analyst at BMO Capital Advisors, in a note dated 5 December, 2024.
Headcount
This is prompting them to adopt different measures. On Sunday, TCS said it would cut 2% of jobs, partly attributing its decision to AI. Earlier, HCL Technologies said it would reduce headcount outside India as automation takes up lower-end skills. Wipro has asked many employees to complete a mandatory English assessment. Mint had reported in February that pay hikes for several senior executives at LTIMindtree would depend on a coding and general math-based assessment.
"Our view is that AI-related productivity benefits could be meaningful in the 20-30% range over time. Hence, all services providers will need to 1) gain share and/ or 2) enable and capture new addressable market opportunities to sustain growth. We remain concerned on impact to long-term growth from AI efficiency," said BMO Capital Markets analysts Keith Bachman, Adam J. Holets, and Bradley Clark, in a note dated 23 July.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hindustan Times
27 minutes ago
- Hindustan Times
'Work weekends or stay late daily': Indian manager's shocking ultimatum to employees
A post about an Indian manager allegedly asking an employee to report to work on weekends for 8-hour shifts or add two days extra to their work hours for the coming week has sparked conversations around toxic workplaces among Reddit users. An individual posted a screenshot of a WhatsApp chat, claiming it's from the manager of one of their friends. An Indian manager's WhatsApp text on an office group has sparked anger among Reddit users. (Reddit/Awd_7, Unsplash (Representational image)/Muradi) 'This screenshot is from my friend's whatsapp group - the last msg is from her manager apparently having the audacity to normalise working on weekends,' the Reddit user wrote. In the screenshot, a part of a partially visible message reads, 'I have commitments and plans so unable to work on Saturdays and Sundays if possible I will try to complete.' It is followed by messages from other employees in the group chat who say they won't be able to work on Saturday and Sunday. In response, the manager slams one of the employees and says that the team's weekend unavailability will be addressed in the office the following week. 'This is not going to work, we need to plan something else, I will address the complete team on Monday, either we have to report to office on Saturday and Sundays for complete 8 hours or need to extend the shift on a daily basis for 2 hours for next three kindly prepare your mindset and come to work on Monday,' the message reads. The post on Reddit was published by an unverified user. has not independently verified the claims. An alleged text on WhatsApp from an Indian manager. (Reddit/@Awd_7) What did social media say? An individual suggested, 'They are literally stealing his labour. Refuse tactfully. If that doesn't work, refuse directly. Of course, he needs a new job soon.' Another added, 'They do it to reach you outside of work timings— they have no shame about it. Unless it's a genuine emergency, I simply ignore their calls/messages. I even had to block a colleague.' A third shared, 'Teams is documented. When they make requests like this, they don't want evidence. If someone goes to court, they can say it was a rogue manager. But on Teams, every message is logged; they can't do that.' A fourth wrote, 'Absolutely do not work a second on the weekend unless it's your own fault for not being able to in the week. Very slippery slope. Pretty sure none of us gets paid overtime for that.' Forced to work 20 unpaid hours: In a separate incident, a software developer claimed on Reddit about being pressured into working for 20 hours every week, on top of the standard working hours. The employee claimed that the overtime was unpaid. "That's 3 hours every weekday after work and my weekends completely gone,' the employee wrote on Reddit, adding, 'It's unpaid, non-negotiable, and they've made it clear that if I want to grow here, I have to do this.'
The Hindu
27 minutes ago
- The Hindu
The Hindu Morning Digest, August 5, 2025
Trump says he will 'substantially' raise tariffs on India over Russian oil purchases; 'unjustified and unreasonable', says New Delhi Less than a week after he announced a 25% tariff on imports from India 'plus a penalty', U.S. President Donald Trump on Monday (August 4, 2025) once again raised the issue of India buying oil from Russia and profiting from it. He stated that he would be 'substantially' raising the tariff 'paid by India to the USA'. The Indian government hit back at Mr. Trump's statements and also criticism from European countries on India's trade with Russia, saying that such 'targeting of India' was 'unjustified and unreasonable'. In a statement, the government pointed out that not only did the U.S. encourage such trade previously, both the European Union and the U.S. continue to actively trade with Russia in excess of the amount that India does. Netanyahu to convene cabinet as Israel decides next steps in Gaza after ceasefire talks collapse Benjamin Netanyahu will convene his security cabinet this week to decide on Israel's next steps in Gaza following the collapse of indirect ceasefire talks with Hamas, with one senior Israeli source suggesting more force could be an option. Bihar leaders find SIR draft rolls 'difficult' to compare Opposition parties in Bihar on Monday (August 4, 2025) accused the Election Commission of India (EC) of 'deliberately' making it 'difficult' for them to compare the electoral rolls issued ahead of the Lok Sabha election in January 2024 with the draft rolls published on August 1 as part of the Special Intensive Revision (SIR), even as the poll panel said that no party has filed any claim and objection for addition or deletion of names, yet. Unease prevails in J&K ahead of Article 370 abrogation anniversary With security heightened, unease gripped Jammu and Kashmir on Sunday (August 3, 2025), ahead of the sixth anniversary of the abrogation of the special provisions of Article 370 in the erstwhile State. While National Conference (NC) leader and Chief Minister Omar Abdullah of the National Conference (NC) expressed optimism, the Opposition Peoples Democratic Party (PDP) observed 'a 150-minute blackout' on the occasion. BJP raises spectre of 'political Islam' infiltrating Church in Kerala The BJP has raised the spectre of 'political Islam' infiltrating the Church in Kerala. The party's State vice-president Shone George told a news conference on Monday (August 4, 2025) that radical Islamists, beholden to the Social Democratic Party of India (SDPI) and Jamaat-e-Islami, had infiltrated Church protests in sizeable numbers, including those led by bishops, across the State. IND vs ENG fifth Test: Mohammed Siraj does the star turn as India levels series with a stunning win Mohammed Siraj couldn't hold back his tears as Dhruv Jurel ran in and hugged him. Shubman Gill stood quietly for a moment, looking up at the sky, before the teammates rushed towards him to celebrate. Prasidh Krishna waved towards the packed stands as the tricolour fluttered high. It seemed after 25 days of riveting action, the best was saved for the last as India came from behind to pull off a six-run win against England in the fifth Test and draw the series 2-2. Sheikh Hasina completes a year in exile in India as Bangladesh plans election in 2026 A year after then Prime Minister of Bangladesh Sheikh Hasina fled Dhaka and arrived in India, she remains in regular contact with Awami League party leaders in Bangladesh and in exile around the world. Her exact whereabouts in the present and political future, however, remain a mystery, as New Delhi has discouraged her and her supporters from overt political activity. Ms. Hasina now faces a number of charges over corruption, human rights violations and even war crimes during her tenure, making her return to Dhaka unlikely at present. Meanwhile, after saying he would not stop the Awami League from standing for elections expected to be held in mid-February 2026, Bangladesh interim government's Chief Adviser Muhammad Yunus has banned the erstwhile ruling party and its students' wing, making it impossible for them to participate. Skeletal remains found at new location near site no. 11 in Dharmasthala The Special Investigation Team (SIT) probing the alleged burials at Dharmasthala found a few skeletal remains at a new location, which was near site no. 11, in the temple town, on Monday. As the SIT was preparing to dig at site no. 11, which was among the 13 burial sites identified by the 50-year-old complainant, he suggested that a site at a new location nearby also be dug. The SIT personnel found a human skull and a few bones of a human body at the new site in the Banglegudde area. Israeli ex-security chiefs urge Trump to help end Gaza war Hundreds of retired Israeli security officials, including former heads of intelligence agencies, have urged U.S. President Donald Trump to pressure their own government to end the war in Gaza. 'It is our professional judgement that Hamas no longer poses a strategic threat to Israel,' the former officials wrote in an open letter shared with the media on Monday. Lok Sabha disrupted as Opposition seeks debate on Bihar SIR Parliament did not function on Monday (August 4, 2025) with Opposition parties disrupting the Lok Sabha over demands for a discussion on the Special Intensive Revision (SIR) of electoral rolls in Bihar. The Rajya Sabha was adjourned as a mark of respect for member Shibu Soren, who passed away. Rahul Gandhi to begin yatra covering 30 districts in Bihar from August 17 The Leader of the Opposition in the Lok Sabha Rahul Gandhi will set out on the 'Matdata Adhikar (voters' rights) Yatra' in Bihar in three phases covering 30 districts from August 17. The yatra, originally scheduled to begin on August 10, has been 'postponed by a week' following the death of Jharkhand Mukti Morcha (JMM) leader Shibu Soren, Congress spokesperson Asit Nath Tiwari told The Hindu.
Mint
27 minutes ago
- Mint
Global markets today: Nikkei 225, Kospi rises after Trump increases tariffs on Indian exports
Global markets today: Asian markets moved higher after U.S. President Donald Trump revealed intentions to sharply increase tariffs on Indian exports to the U.S. Trump announced on Monday that he plans to significantly increase tariffs on Indian goods in response to India's imports of Russian oil. In turn, New Delhi described the U.S. president's move as 'unjustified' and stated it would take steps to protect its interests. 'India is not only buying massive amounts of Russian Oil, they are then, for much of the Oil purchased, selling it on the Open Market for big profits,' Trump wrote on the social media platform Truth Social. Japan's Nikkei 225 advanced by 0.54 per cent, and the Topix edged up 0.45 per cent. South Korea's Kospi climbed 1.77 per cent, while the Kosdaq, focused on small-cap stocks, rose 1.83 per cent. Australia's S&P/ASX 200 also registered a gain of 0.84 per cent. On Monday, all three major U.S. stock indexes posted their biggest single-day percentage gains since May 27, as investors looked for buying opportunities following the previous session's selloff and increased expectations of a September interest rate cut due to weaker-than-anticipated jobs data released on Friday. The Dow Jones Industrial Average rose by 585.06 points, or 1.34 per cent, to close at 44,173.64. The S&P 500 advanced 91.93 points, or 1.47 per cent, to 6,329.94, while the Nasdaq Composite surged 403.45 points, or 1.95 per cent, finishing at 21,053.58. The second-quarter U.S. earnings season is nearing its end, but investors are still anticipating key reports this week from companies such as Walt Disney, opens new tab. Tesla shares climbed 2.2 per cent after the electric car company awarded CEO Elon Musk 96 million shares, valued at approximately $29 billion. (With inputs from agencies) Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
