I.T. Services Model Is Outdated? Expert Sees Tough Road Ahead Amid AI Shift

India's IT services industry could be entering a difficult transition phase as traditional labor arbitrage and time-and-materials business models lose relevance. Piyush Pandey, Senior VP, Equity Research Analyst, Centrum, says the sector has not evolved enough toward product-led or outcome-based offerings. While enterprise AI presents a promising long-term opportunity, it currently contributes only a small portion of revenues, with the core business facing increasing disruption. He believes this mismatch will keep the industry under pressure in the near term. Pandey adds that IT companies must leverage their strong cash flows, make tough strategic decisions, and reinvent their business models to remain competitive in the AI era.