AI’s Impact on India’s IT Industry: A Call for Transformation

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2025-03-03

The Indian IT industry is facing a significant shift, driven by the rise of artificial intelligence (AI). During a keynote speech at Nasscom’s annual Technology and Leadership Forum in Mumbai on February 24, 2025, HCL Technologies’ CEO, C Vijayakumar, declared that the traditional business model that has dominated the industry for the last 30 years is now outdated. According to Vijayakumar, companies must adopt a “paranoid” mindset to thrive in the future. This article explores the insights from both Vijayakumar and Infosys CEO Salil Parekh, as they address the challenges and opportunities posed by AI advancements in India’s IT sector.

Summary

At Nasscom’s 2025 forum, HCL Technologies’ CEO, C Vijayakumar, boldly stated that the 30-year-old business model of India’s IT industry is obsolete due to AI advancements. Over the last three decades, the industry has thrived on a linear growth model—scaling revenues and workforce in tandem. However, this model, according to Vijayakumar, is ripe for disruption. HCL Technologies is already challenging teams to double revenues while halving the workforce, relying on AI-driven automation to boost productivity.

Infosys CEO Salil Parekh echoed similar sentiments, calling for a “paranoid” approach to ensure continued relevance in the changing landscape. He also pointed out that much of the industry still follows input-based models and suggested a pivot toward output and platform-based services.

Further, Vijayakumar warned about the risks of relying on open-source models and advocated for Indian tech firms to build their own large language models. Developing proprietary models, he argued, would provide a long-term competitive advantage and help reduce reliance on external sources. Both leaders discussed the evolving growth strategies, with Parekh mentioning major acquisitions and Vijayakumar downplaying the importance of company size.

What Undercode Says:

The Indian IT industry, long accustomed to its steady growth and traditional revenue models, is now at a crucial juncture. C Vijayakumar’s call for a “paranoid” mindset is a direct reflection of the urgency with which companies need to adapt to the AI-driven future. Over the last 30 years, the model of scaling revenue by adding more personnel has largely defined the industry’s growth. But AI, automation, and new technological tools have begun to radically change the way businesses operate, making this model increasingly unsustainable.

AI’s role in automating tasks traditionally performed by human employees is undeniable. HCL’s approach to challenge teams to double revenue while cutting the workforce by half highlights this shift in emphasis. Automation is not just a tool to reduce costs but an opportunity to dramatically enhance productivity without expanding the human workforce. In this new era, companies that can successfully integrate AI into their operations will not just stay afloat—they’ll thrive.

Salil Parekh’s remarks align with the growing need for output-based business models rather than input-based ones. For decades, Indian IT firms have relied on manpower-driven projects, where scaling up meant hiring more people. But as AI and automation reshape the workforce, this model will no longer be sustainable. The future lies in focusing on delivering higher-value outcomes and leveraging technology to maximize efficiency and productivity. Platform-based services are poised to be the new norm, as they allow businesses to leverage AI and other technologies for scale without the same level of manual intervention.

The most striking piece of advice from Vijayakumar, however, is the call for Indian tech companies to develop their own large language models. While open-source models have been popular, relying on these external systems can create vulnerabilities, especially given the geopolitical risks involved. Developing proprietary AI models would give Indian firms more control over their technology stack, reducing dependency on external entities and positioning them for long-term success.

In terms of company strategy, the focus on acquisitions, as mentioned by Parekh, indicates a shift towards consolidating resources and capabilities to stay competitive. But Vijayakumar’s perspective on company size being less relevant underscores the changing nature of competition—success in this new landscape may not depend on being the biggest, but rather on being the most adaptable and innovative.

As India’s IT industry stands on the brink of this transformation, it’s clear that only those companies ready to embrace AI and a new business model will remain competitive in the years ahead. The pace of change is accelerating, and companies that fail to adapt may find themselves outpaced by more agile competitors.

Fact Checker Results:

  1. C Vijayakumar’s statement about the obsolescence of the traditional model aligns with industry sentiments about AI’s role in transforming business practices.
  2. Infosys CEO Salil Parekh’s call for a shift from input-based to output-based models reflects ongoing discussions within the industry about the need for innovation.
  3. Vijayakumar’s recommendation for Indian firms to develop their own language models is based on strategic foresight regarding the risks of relying on open-source systems.

References:

Reported By: https://timesofindia.indiatimes.com/technology/tech-news/hcl-tech-ceo-time-is-up-for-indian-it-industrys-30-year-old-business-model-infosys-ceo-agrees-says-industry-needs-to-be-/articleshow/118671367.cms
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