Generative AI has been identified as a significant opportunity for the Indian IT sector, according to a report by Nuvama Wealth Management. Contrary to fears of being a threat, the report suggests that AI technology will initially disrupt the industry but ultimately lead to long-term benefits. The adoption of Gen AI by enterprises is expected to create new revenue streams for Indian IT firms, particularly in services like legacy code upgrading and data readiness for AI integration.
One of the key areas of opportunity highlighted in the report is the modernization of legacy systems, such as core banking systems. Many financial institutions still rely on mainframe systems and outdated programming languages like COBOL. Gen AI offers automated code modernization, driving demand for Indian IT services to upgrade these systems. This presents a significant revenue stream for Indian IT companies, as non-Indian firms lack the scale to handle the conversion to COBOL.
The report emphasizes the importance of upgradation of legacy code as a major opportunity for IT companies as businesses prepare for AI integration. Gen AI is expected to create new service lines for Indian IT firms, including AI-based customer service, fraud detection, predictive maintenance, and knowledge processing. These AI-driven solutions will allow IT companies to offer higher-value services to clients, ultimately boosting revenue and profit margins.
Indian IT companies have a history of adapting to evolving technologies to continue servicing customers effectively. The report suggests that this trend will continue with the adoption of Gen AI, providing the longevity that the industry has seen over multiple decades. Gen AI has been compared to “a hammer looking for a nail,” indicating that its applications are still being explored but its potential is undeniable.
Looking ahead, the report forecasts a strong start to FY25 for Indian IT companies, driven by growth in the Banking, Financial Services, and Insurance (BFSI) sector, increased technology spending, and large deal ramp-ups. The optimism surrounding Gen AI adoption and the potential for new revenue streams in legacy code upgrading and AI integration services bodes well for the future of the Indian IT sector. Overall, the report suggests that Gen AI will lead to a stronger Indian IT industry with increased opportunities for growth and innovation.
