India's IT Industry Faces Slower Growth Amid Artificial Intelligence Transition

India's IT Services Industry to Weather AI Disruption

Market veteran Sanjay Bhattacharyya, Partner at Fortuna Capital, has downplayed concerns that artificial intelligence (AI) will disrupt India's IT services industry. Speaking at the Moneycontrol Global Wealth Summit, Bhattacharyya suggested that widespread adoption of AI will be slow and will depend on the development of practical applications.

AI Adoption Patterns

Bhattacharyya drew parallels between AI and the early years of the internet, noting that the diffusion of AI by companies and users will be slow. He pointed out that the internet did not take off until practical applications were developed. Similarly, AI's impact will be significant when it can be used productively on a large scale.

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Indian IT Companies Adapting

Indian IT companies are aware of the structural changes brought about by AI and are exploring ways to adapt. Bhattacharyya noted that they are experimenting with different strategies, including partnerships with global technology firms and adjustments to their service models.

Sector Evolution

While the transition may slow growth temporarily, Bhattacharyya believes the sector will continue to remain relevant. He predicts that Indian IT services will evolve into a relatively stable business delivering moderate returns with lower volatility for long-term investors.

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Investment Outlook

For long-term investors, Bhattacharyya suggests that the sector will be a low-volatility, moderate-return investment opportunity. He notes that this outlook is based on a five-year perspective from the current date.