A large part of Gujarat’s IT sector is dominated by SME entities largely dependent on outsourcing business. But with modern technologies like Artificial Intelligence (AI), automation and the Internet of Things (IoT) taking over the technology services domain, IT companies operating on the traditional outsourcing models have begun losing business.
The IT companies in Gujarat were already hit by massive budget cuts by US and European companies over the past year. Now with the advent of generative AI technology, the situation has only worsened, as automated tools can perform tasks like =coding, content writing, and design. As a result, businesses in search engine optimisation (SEO), digital marketing, content creation, and web application development are losing revenue.
“With AI and other new tech offering end-to-end solutions for digital projects, the need for outsourcing is dropping. To stay in the game, tech companies here need to innovate, train their workforce, and improve their services,” an IT expert in Ahmedabad said.
Tech giants such as Google, Microsoft and IBM have launched numerous generative AI tools that offer infinite capabilities for executing mundane tasks in minimal time frames at no extra cost.
Estimates suggest that at least 70% of companies not offering additional services face revenue challenges, with some clients delaying projects and reducing human resources.
Generative AI tools can not only create specialised content and digital marketing tools, but also develop new software, mobile apps, and websites, as well as create tutorials, and promotional videos.
“Many of our US and European clients are putting projects on hold and cutting costs. They insist on cutting human resources on certain projects by 50%. This is gravely impacting revenue streams of several IT companies here,” said a Rajkot-based IT company owner.
Economic and political instability in the US and Europe has also led to budget constraints. “Clients are aware of the importance of tech innovations and what it costs,” said the founder of a Rajkot company that depends on outsourcing work.
Over the past three years, IT companies in Gujarat and India have grappled with significant cost escalations, primarily due to rising staffing expenses. This cost surge has curtailed companies’ ability to withstand revenue shocks.
Clients now demand more in terms of deliverables from IT companies while technology is advancing rapidly. Skill upgrades are crucial.
Indian IT firms face a technological shift at a time when revenue streams are slowing, and delivery costs remain high. This creates disparities, with companies that consistently enhance their offerings gaining an edge while others suffer business losses.
IT industry stakeholders heavily emphasise the timely upgrading of workforce skills and offerings to stay relevant. The onus is on academia and industry to constantly upgrade the workforce’s skills and carve a niche for futuristic technologies.
Industry experts anticipate a surging demand for adept engineers due to the evolution of AI tools.