Moneycontrol Pro Panorama | The shifting sands of disruption in IT services

Indian IT services have been talking about artificial intelligence and are investing and training their employees on it.

Global IT services company Capgemini is shelling out $3.3 billion to acquire WNS, a business process management services firm. Both the companies have a large employee base in India and consider local IT services vendors as their competition.

The acquisition marks an important milestone for Capgemini, WNS but also the IT services industry in general. The deal can trigger consolidation in the industry, write Debangana Ghosh and Reshab Shaw of Moneycontrol. Legacy IT services can look to gain AI capabilities and deepen their domain expertise through acquisitions.

Capgemini is acquiring WNS to accelerate its agentic AI-powered services offerings. WNS has developed a set of sector specific AI-led solutions and has earlier this year acquired Kipi.ai to strengthen analytics and AI capabilities.

Indian IT services have been talking about artificial intelligence (AI) and are investing and training their employees on it. But none have acquired a company of WNS's size to scale up their offerings in new technologies as yet.

Capgemini may have company-specific reasons to make such as a large acquisition. But the reasons provided for the acquisition hold equal relevance for the Indian IT services industry.

Business process management, a large business segment for IT industry, is transforming from a labour cost arbitrage model to a technology-driven automation and business outcomes model.

“In parallel, client focus has shifted from efficiency gains toward end-to-end value creation and business outcomes, opening opportunities to add non-linear revenues. This is creating a rapidly growing market opportunity,” Capgemini and WNS said in a statement.

Indian IT companies are mindful of the technological changes.

N Chandrasekaran, chairman of Tata Consultancy Services (TCS), dubs the Generative AI as a civilizational shift. “The path is clear: IT and business services are moving toward autonomous operations,” Chandrasekaran said in TCS’s latest annual report.

Still, the key is preparedness. As AI deployment at clients and business enterprises moves from proof of concept to deployment stage, IT vendors should be well equipped to manage this change.

AI agents can reduce incremental hiring requirement for the workforce. Industry observers also fear AI and automation to have a deflationary impact on revenues of IT companies in the short term.

That said, technological innovations in the past have improved productivity, opened new opportunities and helped create new business segments. Companies who adopt to change faster and deliver benefits to customers will withstand the current transformation better.

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