New Delhi (India), February 14 (ANI): Artificial intelligence (AI) is unlikely to eliminate the need for IT services. Instead, it will be “another tool to tackle more work with the same budget,” similar to offshore workforces, enterprise software and cloud computing in previous technology cycles, according to a report by JPMorgan’s Asia-Pacific equity research team.
JP Morgan, in a note titled “Indian IT Services: Staring Through the Mist of AI 2 — Discount for Extinction? Div/FCF Yields at Crisis Level”, asserted that AI will not diminish the opportunities set for IT vendors, but will create net new job areas.
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“AI will therefore become another tool to handle more work with the same budget, similar to traditional offshore labor, enterprise software and cloud,” the report says.
The report highlights new demands for modernizing legacy code, rewriting customized SaaS applications as needed, building operational AI agents, ensuring AI reliability and trustworthiness, and integrating physical AI systems.
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Enterprise technology teams, long seen as underfunded relative to business demands, are likely to rely on AI to scale production within limited budgets, rather than completely replacing service providers.
JPMorgan said the recent market weakness reflects concerns that rapid advances in AI could compress revenue growth and reduce the overall addressable market for Indian IT companies.
However, the report warns that it is simplistic to think that AI can automatically replace enterprise-grade software and integration capabilities provided by IT services companies.
They describe these companies as the “plumbers of the tech world” and argue that bespoke AI-driven software implementations still require significant service expertise to work in complex enterprise environments.
“IT companies remain the plumbers of the technology world,” the paper said. “But it is naive to think that AI can automatically generate enterprise-grade software and replace the value that IT services companies create throughout the cycle.”
The Nifty IT index has fallen 10% in the past month, partly due to concerns that advances in AI will disrupt India’s IT services, but the overall Nifty index is flat, JPMorgan said.
“Bears argue that AI will erode software/SaaS, thereby reducing the scope of IT services operations,” the paper said. (Ani)
(The above article is verified and written by ANI staff. ANI is South Asia’s leading multimedia news agency with over 100 bureaus across India, South Asia and the world. ANI brings you the latest news on politics and current affairs, sports, health, fitness, entertainment and news from India and around the world. The views expressed in the post above do not reflect the views of latestLY.)
