OpenAI’s recent launch of GPT-5 poses a potential threat to India’s $283 billion IT services sector, as highlighted by a Kotak Institutional Equities report. The enhanced capabilities of GPT-5 in coding and automation may lead to a 2-3% revenue decline for Indian IT firms over the next 2-3 years. The industry, heavily dependent on software coders, is already facing AI-driven disruptions that have improved productivity by 20-40%. This shift towards AI is resulting in a move from traditional billing models to AI-augmented services, prompting major firms like Tata Consultancy Services and Infosys to reevaluate their strategies within 12-18 months. While the economic slowdown has caused flat or negative growth, there are long-term benefits anticipated as the adoption of generative AI could pave the way for new opportunities. However, careful integration and governance of GPT-5 are crucial to mitigating potential misuse and ensuring its effectiveness in enterprise applications.
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