BofA-India IT Services AI： Separating wheat from the chaff：Takeaways from Wipro CTO call-20251128

Start of AI phase has seen high deflation

We hosted CTO & CSO of Wipro – Hari Shetty - to understand the impact AI has had onthe IT services deals and business model so far as well as the trajectory ahead. As perthe speaker, coding has become one of the first viable use cases of AI, given theproclivity of IT services companies to adopt AI into their offerings. At the same time,competitive dynamics have resulted in IT services companies pushing for AI adoption ata higher than anticipated pace. As a result, companies are now being able to offer 20%-35% productivity in cost takeout projects. Net of AI implementation costs, the savingsfor customers are meaningfully lower than this percentage. As commercial modelsevolve and the broader demand environment gets better than current levels, companiesare likely to adopt newer pricing models that could enable better monetization of AItools and offerings.

Impact is expected to lessen going ahead

As per the speaker, AI is likely to result in newer spends / programs around technologyand business transformation. Technology transformation using AI has been a top priorityfor enterprises, but initiatives have often stalled given the quality of data. Demand forsuch programs is increasing as the challenges are being gradually overcome. On using AIfor business transformation, there is a high interest quotient from the C-suite, butprogress has been slow given the need for change management as well as for want of amore conducive macro environment. BFSI (that has traditionally had a high tech spendintensity) and healthcare have taken the early lead in applying AI for business use cases.Audit, wealth management and drug discovery have seen some of the first actionableuse cases. Adoption of AI in manufacturing has been slow thus far. Both techtransformation as well as business transformation offer scope for new pricing models.