It’s too early to expect GenAI-led revenues

The much-anticipated boom from GenAI looks like it will not appear at least in any significant way in 2024 in revenue terms. A significant troubling trend is that the tech services spending, which is normally 4-8 times the spending of the other tech, is not appearing in GenAI. This may change over time, but it is highly disappointing for the tech services firms at this time - Peter Bendor Samuel, CEO, Everest Group, tells Bizz Buzz

Gearing Up For GenAI

• Spend in GenAI space still remains low as compared to other new technology areas
• No Indian IT firms have guided in terms of revenue coming from GenAI
• Most deals coming with some components of GenAI embedded in it

Bengaluru: Generative AI is getting embedded in most outsourcing projects won by Indian IT firms, but chances of it contributing significantly to revenues in 2024 remain low. Management of various companies indicated that they are investing heavily into GenAI space without any quantification of revenue to be garnered in the coming quarters. Experts are of the opinion that 2024 will see the trend of gradual maturity in the GenAI space but revenue share of this new technology will remain minimal.

“The much-anticipated boom from GenAI looks like it will not appear at least in any significant way in 2024 (in revenue terms). A significant troubling trend is that the tech services spending, which is normally 4-8 times the spending of the (other) tech, is not appearing in GenAI. This may change over time but it is highly disappointing for the tech services firms at this time,” Peter Bendor Samuel, CEO of global consultancy firm, Everest Group, told Bizz Buzz.

Generative AI, since its advent, has seen aggressive investments from Indian IT firms as they seek to get the first mover advantage. Indian IT firms have been reskilling their work force in GenAI skills as it becomes a topic of engagement with most customers.

“We are seeing strong interest levels and engagement from customers on GenAI. Currently we are working with several clients on improving customer contact centres,and employee assistants. Generating insights from legal contracts, construction design, product & marketing content generation are other key areas being explored. Further, exploration in theform of POCs (proof of concepts) is underway in several areas across the value chain. And productmarketing, content generation are other key areas being explored,” K Krithivasan, CEO of Tata Consultancy Services has said during the post results analyst call.

However, Indian IT firms have not yet shared any revenue share from this emerging technology.

“We are not, at this stage sharing externally any views on revenues or projects and so on. What is happening today is, almost every discussion with clients involves some element of Generative AI. And what we have now developed through Topaz is a set of areas where there is benefit cases, use cases scenarios where there is impact, where we are working across a large number of clients on those in different scales, where there are some which are more pilot, and some which are programmes,” Salil Parekh, CEO of Infosys has said during the analyst call.

Meanwhile, some tier-II firms are preparing to provide revenue guidance in terms of GenAI in coming quarters.