“The advancements that have happened this year go on to say that there are now use cases or applications of AI beyond coding and into the realm of business processes,” he said.
According to him, Indian IT companies are also strengthening their relevance by partnering with AI intelligence providers. He added that recent announcements by companies such as OpenAI and Anthropic to establish services arms also indicate that a large services opportunity could emerge around AI implementation.
“We think that the advancements that have happened in AI since the start of the year are actually constructive to the opportunity set for the IT services companies,” Tayal said.
Despite the long-term optimism, Tayal cautioned that the near-term environment remains uncertain for the IT sector. Enterprises are currently spending more on AI infrastructure and token consumption, which may leave less room in budgets for traditional IT services projects.
He also said global uncertainty following the West Asia crisis has made some enterprise customers more cautious on technology spending compared with the start of the year.
Also Read | How India’s online shopping market is splitting into two distinct segments, BofA explainsStill, Tayal believes the market may have become too pessimistic earlier about the sector’s growth outlook. Investors had feared a scenario where revenue growth for IT companies could fall to zero or even turn negative alongside margin pressure.
However, recent corporate guidance from Indian IT firms and global companies such as Capgemini suggests growth is stabilising rather than deteriorating sharply.
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Within the sector, Tayal expects the benefits of AI adoption to be uneven. He sees stronger opportunities for companies focused on engineering services, data analytics and BPO operations, while firms competing mainly on aggressive pricing could struggle in an AI-led environment.
“A few areas or the kind of companies rather we would want to avoid are if the business model was a very me-too model,” he said.
Also Read | India’s foreign investor selling is more cyclical than structural: BofA
On valuations, Tayal said growth visibility remains the key factor investors should track. Companies delivering only low single-digit growth may justify moderate valuation multiples, while firms capable of returning to high single-digit growth could command stronger valuations over time.
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