AI’s productivity payoff yet to move the needle for IT cos

Getting real with AI by tracking audited metrics is the need of the hour for IT firms. While companies highlighted aggressive AI adoption by giving out the percentages of new code generated by AI and workforce skilling metrics, audited financial data that presents the real productivity impact is yet to fully show up. A comparison of productivity metrics since 2020 shows that the much-touted AI push did not deliver a step-change in per-employee economics across global and Indian IT services firms. This is despite revenue growth being supported by M&A-led expansion and a sharply depreciating rupee, raising questions around the pace of underlying organic growth.

Overall, the top 10 Indian IT services firms spent about $4.3 billion on acquisitions over the same period, underscoring the sector’s reliance on M&A to bolster growth.