AI Race: Time For Indian IT Companies To 'Wake Up Or Vanish'
The stern commentary from Sandip Agarwal and Trip Chowdhry comes at a time when IT companies, long hailed as one of India's growth engines, have faced immense macroeconomic and growth pressures.
Indian IT companies are running the risk of fading into irrelevance if they fail to beef up on their AI capabilities, warned Trip Chowdhry, Managing Director of Equity Research at Global Equities Research, adding that these companies are severely lagging behind when it comes to everything AI.
“IT services companies are not AI efficient,” Chowdhry told NDTV Profit. “Each IT company should wake up to the new reality, or they will disappear forever.”
Chowdhry's comments came on the back of Accenture's fourth-quarter print, which, as per brokerages, could weigh on Indian stocks, especially due to cautious guidance from the global IT giant.
Chowdhry's assessment points out that Indian IT companies, which largely rely on legacy services, application maintenance and cost arbitrage, must speed up the adoption of AI in order to compete with global peers.
Sandeep Agarwal, fund manager and co-founder of Sowilo Investment Manager LLP, also echoed concerns over growth prospects.
Agarwal said that he doesn't expect large IT companies to see strong growth in the near future. Instead, he is bullish on smaller IT firms.
“We are not positive on large and mid-cap IT companies, but positive on smaller IT companies," he said. The analyst also dismissed the idea of Indian IT firms needing a "time correction".
Agarwal added that Accenture's earnings suggest the Indian IT sector is currently an 'ex-growth' sector. "IT companies can be bought for dividend,s but there is no growth," he said.
The cautious commentary coming in from both Agarwal and Chowdhry comes at a time when IT companies, long hailed as one of India's growth engines, have faced immense macroeconomic and growth pressures.
