Billionaire banker-entrepreneur Uday Kotak has issued a stark warning about the impact of AI-driven productivity gains on Indian IT services companies, as reported by The Hindu BusinessLine. According to Kotak Institutional Equities, rising productivity gains from AI-assisted software development and automation could pressure revenue growth, pricing and outsourcing demand for IT vendors. The report highlights that several global firms are already experiencing significant efficiency improvements, with HSBC reporting '60% speeding up in unit testing' and Citi achieving a '30-40% boost in developer productivity' from AI-driven development. NatWest indicated some agentic AI pilots are delivering '10X productivity gains', while Citizens Financial noted developers could become '5X to 10X more productive' in the future. Kotak's latest comments gained additional context following Google's recent announcement of a massive $80 billion capital raise, demonstrating how even cash-surplus companies continue investing aggressively in AI capabilities.
Kotak's warning was reinforced by Google's recent announcement of a $80 billion capital mobilisation plan, as reported by LiveMint. Despite being cash surplus with annual profits of $160 billion and a market cap of $4.5 trillion, Google unveiled this massive funding initiative aimed at strengthening AI computing infrastructure. The plan includes $30 billion through concurrent public offerings, $40 billion via an at-the-market share sale programme expected to commence in Q3 2026, and a $10 billion private placement with Berkshire Hathaway. Kotak highlighted the stark comparison, noting that Google's profits and market value are close to the combined profits and market capitalisation of all listed companies in India. He emphasized that this scale of investment by world-leading companies serves as a 'wake-up call to all companies to invest into the future, whatever the present maybe'.
Despite global AI disruptions, Citi's head of International Ernesto Torres Cantu assured that India operations remain unaffected by the bank's global workforce reduction plans. Speaking to Mint, Cantu stated that the bank has already completed a significant portion of its planned 20,000 job cuts in other markets and does not expect India to be impacted. He cited competitiveness and productivity as key factors for India's continued importance, noting that India's balance sheet is 25% bigger and revenues are 30% larger than before Citi exited retail banking operations. Cantu emphasized that 70% of foreign companies operating in India expect employment growth in the next year, contradicting perceptions that foreign investors are reducing India investments. He attributed current challenges to circumstantial factors like the West Asia war and AI's impact on service-based economies, while noting that supply chain restructuring presents significant opportunities for India.
Billionaire banker-entrepreneur Uday Kotak on Tuesday urged India Inc to invest for the country's future, as reported by The Times of India. Speaking on X (formerly Twitter), Kotak emphasized that companies need to focus on business fundamentals after the conclusion of the IPL season. He stated that 'Now that IPL is done and dusted, time for India to focus on business of business' in business circles, where IPL is often referred to as 'the business of cricket'. Kotak's message has gained renewed attention following his latest post on June 2, 2026, where he emphasized that Indian businesses need to get much more aggressive with their investment strategy for future growth, no matter what the current market looks like. The timing of his comments coincides with global companies demonstrating unprecedented investment levels in AI technology.
Kotak's warning came as India is being viewed as a laggard in AI technology investments, according to The Times of India reports. This perception has contributed to India's stock market being one of the least invested among emerging markets over the past couple of years. The country's position in AI investments has become a significant concern for investors and market observers, with Kotak's latest comments serving as a wake-up call to all companies to invest in the future, whatever the present may be. As reported by The Times of India, this message is particularly relevant given the massive scale of global AI investments currently underway, exemplified by companies like Google's $80 billion commitment to AI infrastructure expansion.
Despite near-term risks, Kotak Institutional Equities maintains that overall global technology spending trends remain healthy, supported by AI investments and modernisation programmes. The report noted that many financial institutions continue to increase technology budgets in 2026, with spending directed toward AI, cloud migration, infrastructure modernisation and digital capabilities. However, the brokerage cautioned that a significant portion of incremental spending is being absorbed by cloud costs, software inflation and internal AI investments, limiting the benefit flowing to third-party IT service providers. Among largecaps, the brokerage retained 'buy' ratings on TCS, Infosys and Tech Mahindra, while maintaining 'reduce' on HCL Technologies, LTIMindtree and Mphasis. In the midcap space, Coforge, Hexaware Technologies and Indegene were rated 'buy', while Persistent Systems, L&T Technology Services and eClerx Services were assigned 'reduce' ratings.
