Act On Generative AI Now Or See Your Market Share Get Hit: Experts To Indian IT Cos

Artificial Intelligence (AI) has been the centrepiece of every technology-based discussion since early December when OpenAI’s ChatGPT was introduced to the world. While the tech sector has been aware of the developments in the space for a while now and implementing AI-based solutions for Analytics, Sales Forecasting, Customer Service, Human Resources, Security, Autonomous Things, Healthtech and much more, the onus is now on India’s IT companies to double down on generative AI innovations or lose market share.

Earlier in February, JPMorgan analysts told its clients in a note that Generative AI models like ChatGPT will slow down market share gains and deflate pricing for Indian IT companies in the short term. The note also mentioned that as generative AI is implemented more widely, consulting firms such as Accenture and Deloitte would gain market share over Indian IT companies like Infosys and Wipro in the near term.

Justifying its position on the comments, JPMorgan said generative AI will be a deflation driver in the near term on legacy services as they compete on pricing, prompt staff retraining and drive loss of competitiveness.

The Generative AI Wave

The aftermath of ChatGPT’s broader introduction has brought the spotlight on potential disruptions that entire industries could see in the upcoming years. Microsoft was fast to act and poured in USD 10 billion into OpenAI to hitch a ride on the AI mega wave. And this has prompted other tech giants such as Alphabet (Google’s parent company) and China’s Baidu to scramble into announcing their own developments in the generative AI space.

“Given the faster-than-expected evolution of Generative AI, IT companies and businesses at large have been caught by surprise. Though it’s still evolving but the technology is both powerful and scary at the same time. Companies including the Indian IT companies which do not ride this wave of transformation will be left behind and take a hit of their market share,” says Arvind Rathore, President - IT, Anand Rathi IT Pvt Ltd.

While thus far, IT automation has been around repetitive tasks, generative AI is expected to make a huge mark on creative and cognitive tasks as well.

“The IT companies who have invested heavily in AI/ML including Generative AI are going to see their market share increase while others will have to brace themselves,” says Rathore.

ChatGPT and DALL-E have already in their initial stages shown that they can create art, write content and take human-like decisions. In January, Microsoft demonstrated ways in which AI could be utilised to write code and make decisions such as getting approvals for insurance claims.

GitHub Copilot, the cloud-based artificial intelligence tool developed by GitHub and OpenAI, already looks promising at generating code. Generative AI is already capable of helping build applications faster and more efficiently.

Given the fast developments around generative AI, Indian companies must step up their efforts in the space.

JPMorgan in its note also mentioned that among the Indian IT companies, Infosys and Tata Consultancy Services (TCS) might be able to retrain their employees faster than their competitors in the market due to their superior training infrastructure and graduate hiring.

“Yes, in the medium and long run, the pricing (of Indian IT companies) is likely to change but by how much is the question. While it might reduce the cost of human resources required for IT services, there is a cost involved for training models and infrastructure. Accessibility to cloud and data centers for compute power required to train models is also a cost challenge that needs to be considered,” says the Anand Rathi IT executive.

“In the short term, there are still question marks on the legal, ethical and regulatory aspects that will give some preparation time for companies to gear up,” he adds.

He also predicts that generative AI could change the service models and hence pricing models as well. “The service level agreements and contracts would look different in the long term,” he adds.

‘Acting Fast, The Key’

Last year, NVIDIA Founder and CEO Jensen Huang said that India stood a great chance on delivering its AI expertise to the world’s enterprises. Answering a question by BW Businessworld, he affirmed his confidence in the leadership of companies like Infosys, Wipro and TCS to deliver on the promise of AI.

“So, I think that this next phase is really, really exciting for India,” Huang said.

According to the latest study by Polaris Market Research, the global Generative AI Market size and share are expected to generate revenue of USD 200.73 billion by 2032 and are estimated to be valued at USD 10.63 Billion in 2022, at a compound annual growth rate (CAGR) of 34.2 per cent from 2023 to 2032.

Anand Rathi IT’s Arvind Rathore says IT companies will have to act fast. “The actions should include working closely with their clients and establishing a credible roadmap on Generative AI in their services.  They need to upskill their workforce on the skills required. They also need to forge partnerships both with Industry enterprises and the startup ecosystem. They can also create Generative AI labs to incubate products and services.”

There is also a big opportunity for the consulting companies to ace generative AI and they are likely to gain market share over IT companies in the areas of research, advisory and data analysis.

“Consulting companies could use Generative AI for deep research, client advisory, data analysis, and preparing content for client and market reports. This will give them a substantial boost in turnaround time and productivity. They will, however, need to invest in AI and training models for their specific needs otherwise they run the risks of providing commoditised services available in the public domain,” says Rathore.

Media reports suggest that Accenture has already included modules on ChatGPT and AI technologies for their employees in training.

Also Read: On AI, Guardrails & Applications