Amid market downturn, Indian IT firms find takers for its Artificial intelligence-first offerings. Even as discretionary spending slows down, interest in the much-hyped Generative AI solutions remains intact among the clients of IT majors. However, analysts opine that AI’s contribution will only truly materialise and contribute majorly to toplines after macro-headwinds wear out.
Investment
IT majors Infosys, TCS, and Wipro noted that client interest in exploring AI use cases and intent to invest have gained ground. Over the last two quarters, the companies have made investments in building AI capabilities. Infosys, for instance, has launched an AI-first offering dubbed Topaz, which provides solutions and platforms using generative AI technologies. Wipro, too, has committed to invest around $1 billion in the next three years, and has launched the ai360 service.
TCS is also engaging with clients to discover use cases. K Krithivasan, CEO & MD, TCS, in Q1 earnings call, said: “We are currently working on over 50 proofs of concept and pilots, and have more than 100 opportunities in the pipeline. Over the last two quarters, we have engaged multiple customers using our co-innovation framework in exploring use cases for Generative AI across productivity improvement, content creation, and enhancing customer interactions.”
Also read: Infosys inks five-year AI deal with $2 billion target spend
Infosys, too, is working on 80 Generative AI projects for its clients. “Topaz and generative AI platform are resonating well with our clients. The work being done covers large language models for software development of decks, document voice, and video,” said Salil Parekh, CEO of Infosys. He also noted that AI offerings have ‘good margins’, and may help margin improvement in the future as it scales up.
Sumit Pokharna, research analyst and Vice-President, Kotak Securities Ltd, told businessline: “The narrative has changed now as everybody wants to get into AI as its the latest technology. Companies are well-positioned to benefit from the opportunity. However, the pick up in discretionary spending is the prerequisite for the materialisation of opportunities.”
The best time to cash in on the opportunity will be when discretionary spending starts picking up. Automation projects are also one of the significant levers for margin improvement, he added.
Omkar Tanksale, Research Analyst, Axis Securities, draws a parallel to the cloud offerings that started floating 2-3 years ago. Although AI presents a significant opportunity, for it to be a major contributor, it will only happen over time as they develop more applications. “There wouldn’t be an immediate turnaround, it will take two to three years to contribute to the topline prominently,” he notes.
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Published on July 24, 2023
