According to a report by HSBC, India’s IT exports are likely to be $ 210 billion in 2024-25, which is 18 per cent of total global IT outsourcing spending. Over the past decade, India’s IT exports saw a nearly twofold increase, securing an additional five percentage points of the global outsourced IT spending, rising to 18 per cent this fiscal from 13 per cent during 2015-16.
The report showed that the US demand outlook remains positive, led by an improving macroeconomic environment, especially for banking and retail, and supported by a low base. The report has also captured upstream technology spend indicators, including the cloud to IT services multiplier, which is key for Indian IT.
As per HSBC’s analysts, some of the projects have moved beyond the proof of concept (PoCs) stage leveraging generative artificial intelligence (GenAI), but revenues are still a trickle. Offsetting this tailwind is the threat of deflation from GenAI to traditional IT services. A decent share of revenue for Indian IT comes from low- to medium-complexity coding, so there is a potential threat from GenAI, which looks set to automate (or assist) part of this work. The estimates show that 20 per cent to 25 per cent of IT services work may see 20 per cent to 30 per cent deflation, which means a potential four per cent to five per cent fall in overall IT services spending over the next three to four years.
