Opportunity is bigger than before, says Infosys chairman Nilekani on disruption posed by GenAI tools – Crypto News

BENGALURU: Infosys Ltd chairman Nandan Nilekani sought to reassure investors that the rise of generative AI (GenAI) is expanding business opportunities for the company, even as anxiety triggered by the launch of new AI tools has weighed on the stock, sending shares of the India’s second-largest information technology (IT) services firm down 14% between 1 January and 17 February.

“My view is that there is no opportunity gap. Opportunity is bigger than before,” Nilekani told analysts in his brief 20-minute talk on Tech transitions – Why is the AI transition different? as part of Infosys’s first analyst day event on Tuesday.

“It is not an opportunity risk but an execution risk,” said Nilekani, calling the current phase “tumultuous times”.

Nilekani’s sanguine outlook cheered shareholders. Infosys shares rose as much as 4.5% in morning trade on Tuesday to ₹1,430 apiece, even as the Sensex remained largely unchanged at 83,516 points.

AI fears

Infosys also disclosed for the first time that its AI-related revenue was $280.4 million, accounting for about 5.5% of its $5.1 billion revenue in the October–December quarter (Q3FY26).

Nilekani argued that a lag between rapid technological change and adoption by large Fortune 500 companies creates what he described as “deployment gap”, allowing firms such as Infosys to help large banks, retailers, and companies across industries implement AI-led tools.

“Fundamentally, this is root and branch surgery, the way business is done,” Nilekani said, describing how AI disruption is making companies re-examine the way they do business.

“Modernizing of legacy systems cannot be deferred anymore. That is over,” said Nilekani, who, along with his six friends, co-founded Infosys in 1981, and also reiterated new areas where the IT services company could benefit.

Earlier this month, tech stocks, including shares of homegrown IT firms, fell between 5% and 8% after AI company Anthropic launched productivity tools for its Claude Cowork platform that can automate legal work and other functions inside large businesses, raising concerns that such tools could eat into the revenue of the $283 billion Indian IT industry.

Significantly, Nilekani’s upbeat commentary comes after dire warnings from Anthropic chief executive Dario Amodei and Microsoft AI chief executive Mustafa Suleyman, who have warned that AI tools could replace most white-collar work in the next 12 to 18 months.

Besides Nilekani and chief executive Salil Parekh, a dozen senior leaders from the company briefed analysts on how Infosys is navigating a period that has polarized views on the future of the IT services industry between naysayers predicting disruption and optimists expecting growth.

Analysts split

Analysts at Motilal Oswal have warned that “12-15%” of Indian IT services revenue faces direct exposure to “AI-driven productivity/displacement risk”, with incremental pressure from third-party software efficiencies and automation layers.

Others believe much of the current talk about a death knell for Indian IT is exaggerated.

“For the typical IT services the near to medium term still isn’t disrupted. Even if the projects themselves may plateau relatively, the productivity gains will drive margins – as the negotiations with vendors will lag in terms of AI linked discounting compared to the gains actually realised,” Bernstein analysts Venugopal Garre and Nikhil Arela wrote in a 16 February note titled AI vs Human: Code Red and the Programmers’ Endgame.

“The longer run case is unpredictable and hazy, though it likely points at IT services becoming low margin commoditized industry. But that’s quite far off as well as dependent on several factors including AI’s continued refinements,” the note said.

“The current market reactions perfectly capture two fallacies – the slippery slope and the bandwagon, and once the dust of the AI storm settles, we perceive a correction to emerge. Till then, statements like replacement of all white collar jobs will emerge and work wonders for valuations of AI centric companies,” it added.

Other analysts argue AI adoption could instead expand demand for technology services.

“In our view, SIs/ISPs will likely play a key role in the data driven AI world to help Enterprises to adopt AI/AgenticAI through muti-model LLMs and diverse AI tools. We believe that this may increase the demand (largely new) for cloud adoption, app modernization, creation of clean data (structured/unstructured) layer and cyber security walls amongst others through which AI/AgenticAI adoption happens in a trustable manner. Impact of cannibalization could be considerably low in this phase (which is likely to last at least more than 1-2 years in our view) vs the one in post-AI adoption phase,” Equirus analysts Sandeep Shah and Deep Modi wrote in a note dated 16 February.

The rise of GenAI since the launch of ChatGPT by OpenAI in November 2022 has created urgency among homegrown IT firms to rethink how they operate. From forging partnerships with startups to deploy AI agents across internal code-writing and application maintenance businesses to pursuing acquisitions, companies are racing to build capabilities.

In the current fiscal year, India’s 10 largest IT services companies have spent close to $4.5 billion, the highest since the turn of the century, to acquire competencies in AI and cloud technologies amid rapid technological change.

On 17 December, Infosys’s larger rival, Tata Consultancy Services Ltd, said its annualised revenue from AI-related business totalled $1.5 billion at the end of the September quarter (Q2).