AI could become IT sector's next growth engine
Baroda BNP Paribas MF predicts AI will create new opportunities in India's $280 billion IT industry.
1Disruption to current IT revenues
India's $280 billion IT services industry faces revenue risks as AI transforms traditional business models. According to Rohan Korde, some service lines will contract during this transition period. However, long-term AI adoption will shape new growth areas for the sector. Routine coding and maintenance services will be most affected by automation, requiring companies to adapt their service portfolios to remain competitive in the changing landscape.
2Enterprise AI deployment opportunities
Baroda BNP Paribas MF analysts predict that corporate demand for AI integration will create a new service market. Customized AI solutions will see particularly strong growth in financial services, healthcare and consumer services sectors over the next five years. IT firms specializing in these domain-specific AI applications could capture significant market share as businesses seek to enhance operations through intelligent automation and data-driven decision making.
3Data engineering and cybersecurity boom
The proliferation of AI is driving increased investment in data infrastructure and security solutions. IT companies are developing new services to build and secure the data pipelines that feed AI systems. Global data engineering market is projected to reach $78 billion by 2026. Indian firms are expanding their talent pools to capture this growing opportunity, particularly in building specialized teams for AI data preparation and model governance.
4Cloud integration demands
Powerful cloud infrastructure is essential for running AI models effectively. IT service providers are leveraging their expertise to help clients integrate existing systems with cloud-based AI platforms. Hybrid cloud solutions and edge computing are expected to see particularly strong growth. Analysts predict the cloud-AI integration market will exceed $120 billion by 2027 as more enterprises adopt AI at scale across their operations.
5Specialized chip infrastructure investments
Demand for processors optimized for AI workloads is growing rapidly. IT service providers are offering consulting services to help clients design and implement specialized hardware architectures for AI. Dedicated AI processors like NVIDIA's latest chips are creating new service lines. Indian companies are forming partnerships with global leaders to develop capabilities in this high-value segment of the AI ecosystem.
6Financial services leading AI adoption
Baroda BNP Paribas MF identifies financial services as the sector that will lead AI adoption over the next 3-5 years. Significant investments are expected in AI solutions for fraud detection, risk analysis and personalized banking. In India, AI-driven innovations are accelerating particularly in digital payments and microfinance, where intelligent systems can enhance accessibility while reducing operational costs.
7Healthcare and consumer services potential
AI applications in healthcare diagnostics and drug discovery are expanding rapidly, while consumer services are adopting personalized recommendation systems and virtual assistants. IT companies are diversifying revenue streams by developing sector-specific AI solutions. India's young population and high digital adoption rates are fueling growth in these areas, creating opportunities for locally relevant AI applications.
8Long-term industry transformation
Analysts emphasize that while AI may cause short-term job displacement in IT services, it will ultimately create new, higher-value work areas. Indian IT firms can strengthen their global competitive position by transitioning from low-value services to high-value AI solutions. This transformation will shape the sector's growth dynamics over the next decade, potentially creating more sustainable and innovation-driven business models.
Original article: Economic Times — Yapay Zeka BT sektöründe yeni büyüme motoru olabilir