Neutral impactSector
AI may hurt IT today, but it could create the sector's next growth engine: Baroda BNP Paribas MF
Economic Times 2 hrs ago·2 Aug 2026, 5:36 am
Artificial Intelligence is often viewed as a threat to the traditional business models of India's large IT services companies. However, experts argue that the technology will not just disrupt the sector but also act as a powerful engine for its future growth. This shift is moving the industry away from simple outsourcing and towards high-value, technology-led services.
For investors, this transition presents a dual opportunity. While established IT firms may face short-term headwinds, the demand for specialized services is rising. This includes areas like enterprise AI deployment, data engineering, and cloud integration. Consequently, fund managers are increasingly focusing on sectors like financial services and healthcare, where these advanced technology solutions are in high demand.
Moving forward, investors should monitor how IT companies adapt their strategies. The key will be their ability to pivot from general services to offering deep, specialized technological solutions. Keeping an eye on the adoption rates of AI and cloud technologies will be crucial for understanding the sector's long-term potential.
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