Generative AI pressures CEOs amid IT spend shift
BENGALURU, INDIA — Global chief executive officers (CEOs) face mounting pressure from investors to adopt generative artificial intelligence (AI), even as traditional information technology (IT) spending undergoes an economic decoupling.
Leading outsourcing firms like the $200 billion behemoth Accenture voice concerns as the global economy slows down.
According to Reuters, clients who were previously free spenders during the pandemic are now tightening their belts, evidenced by Accenture’s declining year-over-year revenue growth for six straight quarters. In fact, the company is holding off on salary hikes amid IT sector challenges.
In India, the four largest IT companies by market capitalization, including Tata Consultancy Services, Infosys, and HCL Technologies, have seen reduced headcounts over the past three quarters, a key growth metric.
However, adopting AI necessitates major tech upgrades many businesses are unprepared for. Currently, only 40% of applications have transitioned to the cloud, said Accenture’s CEO Julie Sweet. Consulting firm Gartner estimates cloud spending will surge approximately 70% to $917 billion by 2025.
Despite economic worries, Indian IT valuations remain robust, trading at double-digit premiums to long-term earnings multiples. While distinguishing AI winners and losers is challenging now, Accenture reported $300 million in AI deals last year, a fraction of its $72 billion in total new bookings.
