Asia Summer School: India IT Services

研报英文原文证据摘录

Asia Summer School: India IT Services

FoundationM

2025 onwards: AI adoption cycle for India Tech Services

➢ The India Tech Services sector is at a confluence of i) a macro-led slowdown, ii) GCCs’ increasing share in IT/ITES exports, and iii) a technology

transition period.

➢ MS proprietary 2Q26 CIO survey highlights growth outlook for IT Services spend in CY26 to be lower than CY25, with expectations decelerating vs those

recorded in 1Q26 results.

Our views:

➢ Enterprises need to reimagine their workflows with each technology cycle.

i. Tech Services companies help to bridge the gap of tech evolution and deployment, sitting at the intersection of business (domain knowledge) and

technology.

ii. As enterprise architectures become increasingly complex rather than simplified over the years, the need for third-party experts to assume

responsibility grows. The value delivered by Tech Services companies through cost savings far exceeds the cost associated, making the return on

investment attractive for global enterprises.

➢ However, the India Tech Services sector itself is in a transition period, facing impacts from:

i. delayed decision-making;

ii. pricing pressure on refresh/renewal of the existing book; and

iii. accelerated investments in building new and advanced AI services.

➢ In our base case, we think Indian Tech Services companies are going through a big technology shift, creating a transition period and accompanying pain.

➢ In our bear case, we see the risk of a potential decline in absolute revenues in the near term.

➢ We expect sector growth rates in the next five years to be substantially lower than those of the last five years.

➢ Growth is likely to be more skewed toward GCCs rather than third-party companies.

Morgan Stanley Research 23