AI reshapes India's IT services contracts as clients demand more for less

Industry Impact 4
โดย Reuters·IN·Read original
Summary · why it matters

Artificial intelligence is reshaping India's IT services sector as outsourcing giants like Tata Consultancy Services, Infosys, Wipro, HCLTech and Cognizant increasingly tie fees to performance outcomes instead of hours worked. TCS Chief Executive K Krithivasan told Reuters that about 80% of the company's contracts within its finance, human resources and other business services segment are now based on outcome performance measures, a doubling since AI went mainstream in late 2023. Persistent Systems CEO Sandeep Kalra said clients are demanding the same work for 25% to 30% less while expecting faster delivery and higher productivity, and Tech Mahindra CEO Mohit Joshi warned that some rivals are factoring in productivity gains of 70% to 80% over five to seven years and guaranteeing prices despite rising chip costs. The Nifty IT index has tumbled by a fifth this year, with its 10 constituents losing a combined $73 billion in market value, while mid-sized firms like Persistent and Coforge have seen revenue in dollar terms grow by double digits for at least eight quarters in a row.

Impact on stocks 3

Information Technology▲ · 2 stocks
Artificial Intelligence▼ · 1 stocks

Theme Impact 1

Off-coverage companies 5

Persistent Systems LimitedPrivate▼ Negative
Demandrelevance

Clients demanding 25-30% less for same work pressures Persistent's pricing and revenue growth.

Tata Consultancy Services LimitedPrivate▼ Negative
Demandrelevance

80% of contracts now outcome-based, doubling since AI, indicating pricing pressure.

Tech Mahindra LimitedPrivate▼ Negative
Demandrelevance

CEO warns rivals guaranteeing prices despite rising chip costs, squeezing margins.

HCLTechPrivate▼ Negative
Demandrelevance

Clients demanding same work for 25-30% less, pressuring pricing and margins.

Coforge LimitedPrivate▲ Positive
Demandrelevance

Mid-sized firms like Coforge see double-digit revenue growth for eight quarters.

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