India’s IT services sector, led by giants like Tata Consultancy Services (TCS), Infosys, and Wipro, faces significant challenges with rising contract cancellations, according to Citrini Research’s report, “The 2028 Global Intelligence Crisis.” The long-standing model of employing skilled engineers at lower wages is under threat as AI coding agents deliver similar outcomes at minimal costs. The report reveals that the compression of AI’s operational costs, potentially just the cost of electricity, has led to accelerated cancellations, jeopardizing a $200 billion industry crucial to India’s economy.
Firms are now favoring internal software development using AI tools to avoid expensive vendor contracts, exemplified by a Fortune 500 procurement manager negotiating a 30% discount. This trend poses risks not only to mid-tier providers but also to established firms as clients reduce staff and software licenses. A sustained decline in IT exports could weaken the rupee and prompt macroeconomic instability, with the IMF potentially stepping in by early 2028.
Source link
