Artificial intelligence (AI), in its simplest form, refers to the simulation of human intelligence by machines. Generative AI is a branch within AI that focuses on creating or generating new data based on existing patterns and examples such as images, videos, text, and 3D models.
Since the release of ChatGPT, an AI-based chatbot developed by OpenAI, there has been a lot of speculation about AI that could replace some jobs. In fact, according to the latest Microsoft report, 74% of Indians fear AI will take their jobs in the future. The fact that AI can generate content that is indistinguishable from human-generated output represents a major advance that could have a significant impact on the economy.
From an investment perspective, what could AI change for the Indian IT sector and its companies?
It has long been observed that innovation always leads to the replacement of human labor with capital. India’s IT sector is primarily service-based. Most of Indian IT companies’ revenues come from US and European based customers who outsource their functions to Indian IT companies. The development of innovative technology is often a ‘deflationary factor’ as it competes with the status quo in pricing.
Almost every major company today is working on its own generative AI. Examples include US multinational technology company Alphabet and Chinese giants Baidu and Alibaba. Does this mean the end for Indian IT companies?
Opportunity in the Face of Adversity
Generative AI is known to be particularly good at automating tasks. So this can be used rather to increase productivity, allowing developers to focus on the important parts of their work. Features such as coding are only part of the programming process. Encouraging AI to achieve desired outcomes is rapidly becoming a job profile, suggesting that we may see the emergence of new jobs and occupations that complement the use of AI.
Indian IT companies are already gearing up for this technological transformation and have started investing in generative AI. Below are his three examples of developments companies are making.
|
Company Name |
explanation |
|
Tata Consultancy Services (TCS) |
> Announced partnership with Google Cloud to launch TCS Generative AI. This allows you to leverage Google Cloud’s generative AI services to design custom business solutions and deploy them to your clients. > Working on AI-powered financial advisory and wealth management solutions for clients in the BFSI sector > Creating AI-powered virtual fashion designers for retail, computer vision for heavy industry, and AI-driven streaming data analytics for anomaly detection |
|
Tech Mahindra |
> Launched “Generative AI Studio” to provide clients with a suite of AI solutions under the AI offering. It provides businesses with a user-friendly interface and a range of features for customizing content. |
|
Mufasis |
> Launched business unit Mphasis.ai. There, he will partner with AWS and Microsoft Azure, as well as market-leading specialized AI platforms that give customers access to a suite of patented AI assets and models. |
Source: BSE notifications and investor concords of each company
AI may not have a significant impact when it comes to the revenue and profitability of IT companies if they actively use AI and are actively working on the latest developments. Rather, it can help businesses build more efficient teams, potentially increasing profits in the short term. However, these are expected to normalize in the long term. On the revenue side, increased consumer demand for his AI products that are personalized and of high quality are expected to help keep the order pipeline strong.
Data privacy is a challenge
The potential for data breaches and unauthorized access to personal information are major privacy concerns related to AI. Given the amount of data collected and processed, it can be misused through hacking or other security flaws. This is why many organizations do not allow the use of open source generative AI platforms and focus on creating in-house platforms. In the coming months, progress in tackling privacy and cybersecurity issues will become more apparent.
Conclusion
Human resources are the most important asset for IT companies, and companies in the IT sector in India seem to be leveraging this tool. This is evolving rapidly and changes are happening every week. IT companies that aim to improve productivity and provide more value to customers by utilizing AI are expected to hire a large number of AI-related occupations in the future. Enterprises will be aggressively embracing AI and building compelling use cases ahead of their competitors.
(Parimal Ade (Twitter: @AdeParimal) is the founder of Investyadnya.in and Gaurav Jain (Twitter: @gaurav28jain) is a co-founder.)
Disclaimer: The views above are those of the author. It doesn’t necessarily reflect his DH views.
