Veteran investor Raamdeo Agrawal believes artificial intelligence could fundamentally reshape India's IT services industry, with the biggest changes coming from enterprise adoption rather than consumer applications. According to reports from Moneycontrol, Agrawal, the founder of Motilal Oswal Financial Services, stated that while consumer AI is already being experienced, enterprise AI represents the real transformation opportunity. He emphasized that the key question is no longer whether AI will be adopted, but how businesses integrate it into their operations, with much of that implementation work expected to be done by Indians.
For India's IT services companies, AI raises fundamental questions about their existing business models. As reported by Moneycontrol, Agrawal questioned how much of the business model remains unchanged for companies that have enjoyed tremendous growth over the last 25 to 40 years. He noted that the impact will not be uniform across the sector, with some companies adapting very well while others will grow more slowly. Despite this disruption, Agrawal remains constructive on the sector's earnings outlook, arguing that AI has the potential to significantly lower costs for service businesses.
According to Agrawal's analysis reported by Moneycontrol, AI could reduce costs for service companies from 35-60 percent to much lower levels, which would dramatically improve profitability. He explained that from the perspective of listed companies, especially service businesses, lower costs mean higher earnings, supporting his bullish outlook on the market. Agrawal described AI as the latest in a series of technological revolutions after computers, the internet and mobile phones, noting that the pace of technological change is accelerating rapidly.
While AI could boost corporate profitability, Agrawal cautioned that it would also alter the balance between capital and labour. As reported by Moneycontrol, he described it as a fight between capital and labour, noting that labour will inevitably come under pressure. He explained that highly skilled people will command even higher salaries, but lower-skilled work will face disruption. Agrawal acknowledged that whether this is equally good for society remains another discussion point.
The latest developments align with government initiatives to prepare for AI transformation. Maharashtra Chief Minister Devendra Fadnavis recently inaugurated the AI Center of Competency established in collaboration with NVIDIA at Ramdeobaba University, Nagpur. As reported by ANI, Fadnavis emphasized that artificial intelligence, semiconductors, and quantum computing will shape the future, with AI expected to transform the nature of nearly 70% of jobs over the next 1,000 days. The CM stressed the need for educational institutions to produce employable, skilled, and future-ready talent, highlighting the urgent need for multidisciplinary education and research to prepare students for the evolving job market.
