Cloud IT projects poised for GenAI enhancement

GenAI Driving Cloud Demand

Generative AI is pushing enterprises to shift workloads to cloud services. This trend is expected to fuel the next growth phase in cloud-based IT services, analysts say.

"If business declines due to GenAI, demand uptick in cloud and data analytics will compensate," notes Pareekh Jain, IT outsourcing advisor. Analysts anticipate positive impacts for the IT industry.

Recently, Bank of America reported that GenAI could be net additive for the IT sector. Business opportunities will emerge in cloud, digital transformation, data analytics, and security services.

Industry-Specific AI Needs Custom Solutions

Industry-specific AI requires custom application development and significant support from IT services partners. GenAI algorithms are data-intensive, potentially increasing enterprise investments in data and analytics.

According to the report, security challenges will rise with GenAI adoption, leading to higher client spending on cybersecurity. Many segments like application services and testing might be negatively impacted.

Improved coding productivity may cause a deflationary impact on app services. GenAI’s ability to write test cases could shrink the testing services market. Low-end activities like ticket generation may also be affected.

Current Business Model Disruption

Growth from GenAI is expected to marginally offset business losses. IT firms are exploring GenAI, but detailed financial engagements are pending, except Accenture and TCS.

As Indian IT firms prepare to announce their results, analysts expect detailed financial insights into GenAI projects. These insights will help gauge the impact on the firms’ bottom lines.

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