Indian IT firms may lose 20-30% revenue

Bengaluru: Indian IT firms are staring at a scenario in which 20-30 per cent of revenue-generating work can be automated through integration of Generative AI(GenAI) applications in the coming days. This can trigger a large scale displacement of current workforce involved in executing those projects.

According to global IT consultancy firm-HFS, 20-30 per cent of total revenues of many IT firms come from testing and quality assurance. Such work can be easily integrated with GenAI applications, making much of the work automated.

“When you consider that 20-30 per cent of revenues for Indian-heritage IT services providers involve testing and quality assurance, it’s clear that there is growing pressure to weave GenAI into bread-and-butter IT areas like testing, routine maintenance and development,” HFS has said in a post.

According to experts, Indian IT firms are susceptible to see large scale displacement of people unless they integrate GenAI in all their project work and reskill employee base.

“The Indian IT service providers are now competing with budding startup ecosystem, aggressively scaling technology companies, and growing GCCs for ‘talent’. This is making it extremely difficult for them to innovate while remaining frugal. Besides, Generative AI and its most expected repercussions, for instance- automating code development, testing environments and routine maintenance slowed growth considerably (in FY24),” Ashish Chaturvedi, a practice leader at international IT consultancy firm, HFS Research told Bizz Buzz. “The mayhem is not over and the Indian IT industry may lose about a million jobs in the next 18 months unless they take corrective steps,” Chaturvedi added.

As the current financial year approaches its end in a couple of days, this has been a tough year for the entire IT industry. While large IT firms are expected to post revenue growth in mid-single digits, growth rates of mid-tier firms are also likely to come down to high single digits for the current fiscal. Industry players will start reporting their Q4 and annual performances from April first week onwards.

This fiscal also saw most companies reducing their workforce after record two years of hiring. Talent war, however, has also intensified with GCCs (global capability centres) scaling up their operations substantially in India with many setting up new centres.

“Mass level upskilling of talent is the need of the hour. IT firms need to upgrade the talent from routine-based coding or testing work to consulting-led industry-solution-driven skillset,” Chaturvedi of HFS said.

This fiscal year has already seen hectic efforts by domestic IT firms in upskilling their employees in Gen AI technology, which is likely accelerate in the next fiscal year.