If there is a decline in business due to GenAI that will get compensated from a demand uptick in cloud and data analytics. So, the demand for cloud will definitely go up due to GenAI, but we have to see whether that is good enough to offset the loss that may arise due to the new technology - Pareekh Jain, founder, Pareekh Consulting, tells Bizz Buzz

New Wave

• Industry-specific AI requires custom application development
• It also needs support from IT services partners
• GenAI algorithms are data guzzlers
• Its adoption would potentially increase enterprise investment

Bengaluru: Generative AI is likely to push demand for cloud-based offerings of IT services companies as enterprises will shift workload to cloud for leveraging GenAI solutions.

According to analysts, GenAI can fuel the next phase of growth in cloud-based services, which is a positive news for the IT industry. As there are concerns regarding the current business model of IT companies getting disrupted owing to GenAI, any additional growth coming from cloud is likely to compensate for that loss.

“If there is a decline in business due to GenAI, that will get compensated from a demand uptick in cloud and data analytics. So, the demand for cloud will definitely go up due to GenAI, but we have to see whether that is good enough to offset the loss that may arise due to the new technology,” Pareekh Jain, an IT outsourcing advisor & Founder of Pareekh Consulting, told Bizz Buzz.

Recently, Bank of America (BoA) has come up with a report, in which it said that GenAI could be net additive for the IT sector. It said potential business opportunity will come in cloud and digital transformation, data & analytics services and security services.

“Industry specific AI would require custom application development, and support from IT services partners could be high and fast. Moreover, GenAI algorithms are data guzzlers and its adoption would potentially increase enterprise investment in data and analytics services,” the Bank of America note said.

Similarly, the report noted that GenAI would increase security challenges for organisations and it would see more spend coming from clients on the cybersecurity space.

Bank of America note said there are many segments like application services, testing services, and low-end services on customer engagement that are likely to be impacted negative owing to GenAI.

“Improved productivity in coding can result in a deflationary impact on app services revenue. Similarly, GenAI is capable of writing test cases and can result in shrinkage in testing services market size. Also, low-end BPM activities like ticket generation, data entry could get impacted,” the report said.

According to the research firm, growth coming up GenAI is likely to be marginally better than the loss that may arise to existing businesses.

IT firms have already started giving their engagement levels in GenAI space but except Accenture and TCS, others are yet to provide financial details of projects.

As Indian IT firms are all set to announce their results this week, most analysts are expecting concrete finances with regard to GenAI coming from these companies.