The biggest IT services provider in the nation, TCS, anticipates certain transactions based on generative artificial intelligence (AI) in the next two quarters, but their sizes won’t be significant, a senior official said on Thursday.
According to K Krithivasan, chief executive officer and managing director of TCS, such transactions won’t be worth more than $1 billion, in an interview with PTI.
According to Krithivasan, “Each organization will spin out a number of deals, but there may not be a single billion-dollar deal in generative AI,” adding that right now, every organization is experimenting to gauge the potential of the cutting-edge technology.
According to Krithivasan, TCS is preparing for the changes in the market. On Wednesday, TCS stated its intention to educate 1 lakh associates on generative AI and that it is working on 50 proofs of concept.
“Organizations won’t see their greatest effect unless they start an enterprise-wide initiative. Even they won’t notice (the advantages) as long as they continue to do a few pilots here, a few there, and a few use cases, he said.
Before deploying such technologies, businesses must be confident in their return on investment, according to Krithivasan, who also stressed the need of an IT firm testing and comprehending such technologies.
It should be mentioned that generative AI has gained more attention in the IT sector after OpenAI’s ChatGPT was introduced late last year. TCS Chief Operating Officer N Ganapathy Subramaniam said that generative AI is now brought up in every customer discussion during the company’s post-earnings press conference on Wednesday.
Krithivasan said on Thursday that since it regularly invests in staff training, training associates won’t result in a large increase in costs.
Regarding the general demand climate, he said that there is now a weakness due to the economic outlook in the US, which is the main market for the USD 245 billion Indian IT industry. However, when clarity is seen, he predicted that the IT businesses would become more upbeat.
“The lack of optimism (for Internet businesses) stems from the fact that we don’t know with confidence what approach the government will take to dealing with… Considering how strong the economy is right now and how low unemployment rates are, they now believe they would prefer some form of slowdown, he added.
“IT expenditure will be impacted if the governments are responsible for the downturn, which would affect all facets of the economy. That is the source of our doubt or concern,” he remarked.
According to Krithivasan, the IT sector may benefit if it is obvious that the US Fed interest rate won’t be increased further or that the government will stop raising interest rates altogether. This is because it will encourage customers to start spending.
Because customers are reassessing their priorities for what they need to spend in, not all total contract values (TCVs) are being transformed into revenues in the earlier signed agreements, he said, stressing that some projects are delayed or abandoned as a consequence.
But he refrained from giving a specific number for the drop in TCV to revenue conversion rates.
TCS reported a 17% increase in Q1 net profit on Wednesday, but warned of slow revenue growth in FY24 due to persistent market constraints that have resulted in little revenue growth on a sequential basis.
The TCS share price was almost 2.5% higher at Rs 3,346 in afternoon session on the BSE.
