AI volumes may outweigh revenue deflation for IT sector by FY30: Report
CLSA said the industry is facing "multiple macro/micro headwinds", but expects AI to eventually create new growth opportunities. It said AI could initially compress revenues as productivity gains are passed on to clients, but "AI volumes could supersede deflation by FY30."
Artificial intelligence (AI) could propel India's IT services industry to growth by the fiscal year 30, according to a report from CLSA. The report warns that near-term growth may be hampered by economic conditions and reduced discretionary demand. CLSA acknowledges that the sector is grappling with multiple macro and micro challenges, yet remains optimistic that AI will create new opportunities.
It anticipates AI volumes to eventually surpass revenue deflation by FY30, with the industry's USD revenue growth reaching mid- to high-single digits by FY31. The brokerage expects AI-related demand to surge, and believes that despite some short-term revenue compression, AI will ultimately foster robust growth. CLSA's assessment of AI's impact on systems integrators is cautiously optimistic, foreseeing strong growth opportunities despite near-term revenue challenges.
The report also highlights the substantial expansion in AI spending, projecting that generative AI's share of IT services spending will double to 11% by 2029. While concerns persist about rising competition, geopolitical uncertainty, and structural pressures, the resilience in Indian IT demand and increased use of AI tools offer a cautious optimistic outlook for the sector.
Written by urgent.news from Economic Times Tech's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
