Fortune 500 AI usage squeezes margins at India's IT giants
India's big IT companies are feeling the heat as Fortune 500 clients ramp up their use of AI tools like ChatGPT and Claude.
The catch? These "AI tokens" (basically, units of data processed by AI) are getting expensive, eating into budgets that used to go to regular IT services.
Add in more automation cutting billable hours, and profit margins are taking a real hit.
India's IT firms adopt AI pricing
To cope, firms like Cognizant have rolled out new pricing for AI usage, while LTM Ltd. now sells fixed bundles of tokens.
Midsize players such as Coforge are making big acquisitions (like buying Encora for $2.39 billion) to stay in the game.
But analysts warn these moves might not be enough if corporate tech spending keeps shrinking.
The pressure isn't letting up any time soon, so India's IT giants will need to keep adapting fast.