The Indian IT Debate Everyone Is Having Is the Wrong One

· Enterprise AI · 9 min read

Both the bears and the bulls are answering a question the industry stopped facing in 2022.

The analysis

The public argument about Indian IT services runs along a single axis: will large language models eliminate the work, or will they make the industry more productive and therefore larger. Both positions treat AI as the independent variable.

The structural change is older than the model wave. The business was built on an arbitrage between the cost of a competent engineer in India and the cost of the same engineer in a client market, monetised through headcount-linked contracts. That arbitrage has been narrowing for years through domestic wage growth, client-side captive centres, and buyers who now specify outcomes rather than person-months. AI does not create this problem; it removes the last cushion, because it attacks precisely the standardised, well-specified work that was easiest to staff at volume.

Which means the interesting question is not how many jobs a model replaces. It is whether firms can move revenue from effort to outcome — owning a business result, an IP asset, or a platform — fast enough to offset the compression in the pyramid's base. That is a commercial-model transition, not a technology one, and it fails or succeeds on pricing, contracting and account structure rather than on tooling.

For leaders inside these firms the diagnostic is simple: what share of revenue this year is priced on something other than time and materials, and what was it three years ago. If the answer has not moved, the AI strategy is not the constraint.

Full essay on Substack: The Indian IT Debate Everyone Is Having Is the Wrong One.

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