AI is forcing India's 315-billion-dollar IT sector to promise more work for less money
Reuters reports that India's 315-billion-dollar information-technology services sector is rewriting contracts as clients demand the same work faster and for less money. Large providers are moving away from billing for hours and toward fees tied to business outcomes. TCS said about 80 percent of its business-services contracts are now outcome-performance based, roughly double the share since generative AI became mainstream in late 2023. One executive said some clients seek 25 to 30 percent price reductions, while competitors may guarantee dramatic productivity gains years before their cost assumptions are proven. The Nifty IT index is down about 20 percent this year and its constituents have lost roughly 73 billion dollars in market value, while some midsize firms are growing faster than incumbents. Outcome pricing can reward genuine efficiency, but it can also transfer forecast risk to vendors, intensify job cuts, and hide unsustainable bids. The market needs a productivity ledger showing what AI actually automated, which quality measures held, how the workforce changed, and who absorbed the risk when the promise missed reality.