Heads turned when HCL Technologies Ltd chief executive C. Vijayakumar said artificial intelligence would bring a “painful transition” during a fireside chat at the Nasscom Technology and Leadership Forum 2026 on 24 February. Some in the audience nodded in agreement; others looked up from their phones towards the podium at Fairmont Mumbai.
“I think I would say this: This transition is different… it is going to be painful because it really involves people,” said Vijayakumar.
That summed up the mood at the NTLF's 34th edition, held on 23-24 February, which drew around 1,000 executives from IT services, customer support, AI, software products and engineering firms. Amid the networking, the hope that AI would pay off in the long run masked the anxiety.
Concerns began to creep up in the run-up to the two-day event, with the launch of Anthropic's autonomous AI agent Claude Cowork and subsequent social media commentary stoking fears about the future of India’s $297 billion IT services sector.
Since the start of February, the looming existential threat has wiped out at least $45 billion in investor wealth, with shares of the country’s five largest IT services firms—Tata Consultancy Services Ltd, Infosys Ltd, HCL Technologies Ltd, Wipro Ltd, and Tech Mahindra Ltd—falling up to 6% on four occasions in the week preceding the event. Since the start of the month, the big five's shares have fallen almost 20%.
The question divided even the industry. While Vinod Khosla, founder of Khosla Ventures, warned that AI could eliminate much of tech services work by 2030, N. Chandrasekaran, chairman of Tata Sons, and Nandan Nilekani, chairman of Infosys, struck a more optimistic note, arguing that IT services firms would remain relevant, playing a critical role in integrating AI technologies into clients’ back-end systems.
The elephant in the room
Amid deepening fault lines, at least two IT CEOs put on a brave face during the Nasscom event, hinting at a turbulent short-term outlook.
While Vijayakumar highlighted the human cost of automation, Tata Consultancy Services' (TCS) K. Krithivasan pointed towards revenue cannibalization.
“See, we don't have to really incentivize because everybody wants to learn this tech. We need to tell them that one: I am giving you enough opportunity to learn, and two: I am encouraging you to ensure that every solution you provide to your customer is AI-first. As I said, even if it means that we are cannibalizing the revenue,” he said on 23 February.
However, mid-level IT executives said there was still ambiguity over the new technology's use and impact. “We don’t know what AI’s impact will be. We might enter into partnerships with every hyperscaler and AI company in the world, but that is of no use if our clients do not have up-to-date technology to embed this AI. Currently, conversations revolve only around productivity as clients want to bill fewer people,” said an executive at one of the country’s five largest IT services firms, on the condition of anonymity.
Automation tools reduce billing costs by automating much of the work. Until now, the industry has relied on humans to manually run IT functions. Now, with AI bots, machines are increasingly being used not just to follow instructions, but to make decisions and handle tech-related workflows.
Still, a 17 February Bank of Baroda Capital Markets report said while lower workforce demand “could put revenue growth and profit estimates at risk”, the technology was “not an existential risk”.
“AI embrace by enterprises is low or slow as many are not ready, CIOs (chief information officers) may want AI models to stabilize, RoI (returns on investment) thresholds need to be met, there is room for further reduction in errors by AI models, integrators are required to make AI work with varied legacy tech of enterprises, and deep domain skills are required,” the report said.
On either side of the debate, AI emerged as the single biggest talking point of the conference.
A third senior executive said AI would change the nature of deals.
During a panel discussion on 23 February, Babak Hodjat, chief AI officer of Cognizant Technology Solutions Corp., conceded the face of the world’s IT services industry has started to change. “The software services industry was largely pivoted around the idea of companies winning large, sweeping deals with multi-year tenures and billion-dollar outlays. That entire idea is going to go out of the window, given the pace at which AI is moving. Things are changing every few months, and enterprises can’t sign long-term deals for such a transition.”
Executives also flagged concerns about slowing headcount additions.
“I believe revenue is increasingly tied to tangible business results, as opposed to, you know, traditionally, it was linked to the headcount. So that divergence between headcount growth and revenue growth is finally here,” said Rajesh Nambiar, president of Nasscom, during the launch of the annual strategic revenue press conference.
Nambiar added that this has resulted in fewer fresher additions. “There is no question that the overall hiring from the campus has come down significantly from wherever it used to be. You saw the divergence between the revenue growth and the employment growth. There's clear reversion, there's clear nonlinearity,” he added.
This rings alarm bells for the country’s 1.5 million engineering graduates, as IT firms are the largest employers of fresh talent.
In 2024-25, the IT sector hired 133,000 people to end the fiscal year with 5.82 million employees. The industry body expects the sector to hire 135,000 people in the current fiscal, marking a 2.3% year-on-year increase in headcount to 5.95 million.
In deep water
By the end of day two, the writing was on the wall: Despite carefully curated optimism, the mood in the room was one of clear apprehension about what an AI-led future could mean for billions of dollars in economic value—and, potentially, thousands of jobs in the near term.
“AI became the driving force behind the transformation of tech services. By 2025, it moved from experimentation to operational deployment, with enterprises demanding measurable ROI (return on investment). Talent strategies shifted from headcount-first to capability-first; roles were redefined to emphasise ownership of outcomes rather than task delivery; and career growth was recognized as non-linear, shaped by diverse paths and evolving skills,” Nambiar wrote in its leadership note of the 2026 Strategic Review report.
Krithivasan pushed senior executives to learn and build AI solutions rather than just read about it, highlighting the urgency of adapting to the new technology or risk becoming redundant.
For now, it seems IT companies are battling AI rather than riding it.
“I think I'll say two things. Number one is that there is an AI-led expansion that's happening inside these (IT) companies. It's masked by AI-led compression that's also happening in these companies. And it is, it is a difficult narrative to come across, but this is what is the reality. AI is compressing traditional work, and it is expanding some other pieces of work, and the net balance is what you're seeing,” said Srikanth Velamakanni, co-founder and chief executive of enterprise AI company Fractal Analytics, on 24 February.
This AI onslaught has led the 1988-founded industry body to revise its revenue estimates for the last three years as it added more companies to the bucket it tracks, making it the second time in as many years the industry body has had to undertake this exercise.
“We cannot do everything at the same time, but we will keep going back and looking at every sub-sector, studying it in detail, and back-correcting it if need be. Hopefully, we don't have to keep correcting. But given how much the sector is changing, we had to do it once or twice,” said Sangeeta Gupta, Nasscom chief strategy officer, in a conversation with select media publications, including Mint.
Nasscom revised its revenue and growth numbers for the current fiscal year and the past three years, projecting a three-year high in revenue growth of 6.1% to $315 billion in 2025-26, up from its earlier estimate of $300 billion in February 2025.
Still, not all was doom and gloom. Nasscom’s report said the industry’s average revenue growth pace, while likely to remain stagnant, is expected to remain in the mid-single digits in the near future. Fresher hiring, while not showing drastic growth, is also likely to remain at least flat.