CLSA India says AI cuts IT services prices, slows growth
Business
AI is putting downward pressure on IT services pricing, according to Sumeet Jain, Senior Research Analyst at CLSA India.
Prices have dropped 10% to 15% on big contracts and up to 40% on longer deals.
While this sounds great for buyers, it's slowing down revenue growth for IT companies by about 2% to 4%.
TCS Infosys growth expected 1%-3%
Even with more demand for cloud and cybersecurity thanks to AI, the lower prices mean large IT firms like TCS and Infosys are expected to grow just 1% to 3% in 2026 and 2027, way less than earlier guidance.
CLSA recently downgraded both companies as spending stays weak.
On the bright side, SaaS giants like Salesforce and SAP are thriving with AI upgrades, and Coforge stands out for its strong performance amid tough times.