However, it will have to make strategic changes in several areas, according to a report by Nasscom and McKinsey & Company.
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GenAI will generate an economic value of $2.6-4.4 trillion annually, the report said. Of this, 75% will be concentrated in areas that form core service lines for the technology service providers, including software engineering, customer operations, product and R&D, and sales and marketing.
“The Indian IT sector is sitting on a goldmine,” said Ankit Bose, head of AI, Nasscom. “It’s just about how deep we dig.”
The addressable market for the IT sector is set to increase, as the development of over 100 new genAI use cases could bring an additional 15-20% growth, as providers reimagine existing offerings or come up with new ones over the next five years.
Tech services providers should build capabilities to optimise delivery productivity, sales excellence and total SG&A, and increase their current account, Bose said.
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GenAI is likely to improve delivery productivity by up to 30% in the next 2-3 years. Gains are also expected across sales and marketing value chains, from lead generation to faster sales strategy formulation, the report said.A 40% bump in productivity is expected in F&A, legal and HR tasks over the next three years.
Enterprises tapping into data to leverage genAI also throws up opportunities for Indian tech services providers, said Ankur Puri, partner, McKinsey & Company. “Someone needs to manage all the data and maintain the technology stack in which risk guardrails have to be built…No one else is better positioned than them to do this.”
However, innovation, experimentation and discovering new use cases will be key, he said.
The report highlighted seven foundational areas where companies should re-orient: strategy for rapid scaling, technology and partnerships across the tech stack, a data pipeline for model development and fine-tuning, an operating model supporting collaboration and experimentation, talent requirements, risk management and governance, and adoption and change management.
Sufficient compute infrastructure has to be ensured, however. “There has to be substantial effort and investment in different ways from government and us and also the private sector to work together and build this,” Bose said.
Tech job roles will be rejigged, with higher impact at junior levels, the report said, adding that workforces must be upskilled. “There’s a challenge of scale and there’s a challenge of pace, but a loss of jobs is unlikely,” Puri said.
GenAI technology is at a nascent stage; the cost economics, customer-readiness and regulatory and legal boundaries are uncertain, the report said, and there is no clear “winning strategy” to navigate these. But early movers will reap the benefits, Puri noted.
