India’s IT Sector Poised for a Bounce: AI Won’t Hold It Back
India’s information technology sector has been stuck in neutral for nearly two years, but renowned investor Vikas Khemani of Carnelian Asset Management believes the tide is about to turn in its favor.
According to Khemani, earnings growth in the sector is expected to remain robust at 14-16%, despite concerns over artificial intelligence (AI). The narrative that AI will hinder growth is, in his opinion, excessively pessimistic.
This isn’t the first time we’ve seen a major tech shift in the IT sector. Historical examples, such as the transition from mainframes to personal computers and later from on-premises to cloud computing, demonstrate that these shifts often create opportunities for growth rather than hindering it. The widespread adoption of AI and automation should, in theory, lead to increased productivity and efficiency, not less.
The pessimism over AI’s impact on the IT sector is partly driven by concerns about job displacement and the perceived threat to traditional IT services. However, Khemani suggests this view is short-sighted. He argues that AI will augment human capabilities, freeing up professionals to focus on higher-value tasks and creating new areas of growth.
What this means
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Investors should take note: India’s IT sector could be approaching an inflection point, and AI might just be the catalyst. If you’re hesitant to invest in the sector due to concerns over AI, now might be a good time to reevaluate. Vikas Khemani believes the IT correction offers a buying opportunity, making it an attractive long-term investment.
The Indian IT sector has historically been a resilient and growth-oriented segment, and it’s not hard to see why. With a talented and large workforce, a strong foundation in software development, and a government that actively encourages foreign investment, the sector has all the ingredients for a comeback. If AI can help drive growth and increase productivity, now could be the perfect time to get in on the action.
