AI reshapes India's IT services sector contracts as clients demand more for less

Why in news

The Indian IT sector is facing a significant downturn and structural shift due to the disruptive impact of Artificial Intelligence on traditional business models.

Background

India's IT industry is valued at $315 billion. TCS reported over 12,000 layoffs in the last year as the Nifty IT index dropped by 20% this year.

Facts for Prelims

• FactIndia's IT industry valuation: $315 billion
• FactNifty IT Index: Dropped by 20% in the current year
• S&TAI impact: Shift from billable hours to performance-based pricing models

For Mains

Q. Discuss the impact of Artificial Intelligence on India's IT services sector and the resulting challenges regarding employment and industrial competitiveness.

Dimensions to cover in your answer

• structural shift in pricing models
• job displacement and skill gap
• competitive advantage of agile firms
• need for policy intervention

Keywords: disruptive technology · structural shift · productivity gains · automation · industrial competitiveness

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