2 days ago
Indian IT Eyes AI Deployment Spending For Next Growth Cycle
Indian IT companies have had a difficult few years because customers delayed some technology spending.
New AI tools have also created worries that machines could replace some traditional technology work.
However, companies still need help putting AI into their businesses safely and effectively.
This includes connecting systems, managing data, updating old software and checking how AI is used.
The article says AI spending may now be moving from building huge computer systems to using them in real workplaces.
Software companies may earn money first, followed by technology-services companies.
There are still risks from falling prices, uncertain politics and expensive AI infrastructure.
The report believes Indian IT could be a safer way to benefit from AI than investing directly in infrastructure providers.
It names Tech Mahindra, LTIMindtree and Infosys as preferred large companies, with Persistent Systems and Mphasis favored among mid-sized companies.
Indian IT has faced nearly three years of weak spending, longer deal cycles, H-1B pressures and AI-related revenue deflation.
The AI investment cycle may be shifting from building infrastructure to proving returns through deployment, integration, governance and modernization services.
Five major hyperscalers are projected to spend nearly $825 billion on capital expenditure in 2026, creating funding and balance-sheet pressures.
Open-weight models and falling token prices are increasing the importance of implementation, contract design and delivery capabilities.
Enterprise software could benefit in FY27, while Indian IT services may see stronger deployment-driven gains in FY28.
- Who
- Indian IT companies, enterprise software providers, hyperscalers and AI companies are central to the analysis.
- What
- The report assesses whether AI deployment spending could begin a new growth cycle for Indian IT.
- Where
- The analysis focuses on Indian IT and global enterprise technology markets; the article is datelined Mumbai.
- When
- The sector has experienced an almost three-year slowdown; the report discusses 2026 spending and potential benefits in FY27 and FY28.
- Why
- AI investment may be shifting toward deployment, integration, governance and modernization, creating opportunities for services companies.
AI Deployment Opportunity
AI-Related Risks
Indian IT’s role in AI
AI Deployment Opportunity
Indian IT companies could benefit from deployment, integration, governance, managed-agent operations and legacy modernization.
AI-Related Risks
Agentic tools and modernization solutions could automate legacy technology systems and contribute to revenue deflation.
Investment-cycle outlook
AI Deployment Opportunity
As AI spending shifts from infrastructure construction to proving business returns, services companies may capture more value.
AI-Related Risks
Large infrastructure commitments, funding pressures and uncertain returns could restrain spending and investor confidence.
Timing of growth
AI Deployment Opportunity
Enterprise software could benefit in FY27, followed by stronger IT-services growth as deployment expands in FY28.
AI-Related Risks
AI-related pricing pressure and geopolitical uncertainty could delay or limit the expected recovery.
Key facts
- Projected hyperscaler capital expenditure
- Nearly $825 billion in calendar year 2026, according to the report.
- AI deployment commitments
- OpenAI, Anthropic and partner networks reportedly represent more than $9 billion committed to placing engineers within customer organizations.
- ServiceNow AI annual contract value
- More than $1 billion.
- SAP cloud backlog growth
- The cloud backlog has risen 26%.
- Potential timing
- Enterprise software monetization may arrive first in FY27, with larger IT-services benefits expected in FY28.
- Preferred large-cap stocks
- Tech Mahindra, LTIMindtree and Infosys.
- Preferred mid-cap stocks
- Persistent Systems and Mphasis.
Sources
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