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AI-pocalypse: Gujarat’s IT sector faces rise of the machines | Ahmedabad News – Times of India

In the world of technology, if you don’t adapt, you will be forced to say adieu. With modern technologies like Artificial Intelligence (AI), automation and the Internet of Things (IoT) taking over the technology services domain, IT companies operating on classical outsourcing models have begun losing business.
A large part of Gujarat’s IT sector is dominated by SME entities largely dependent on outsourcing business.
Massive budget cuts by US and European companies for digitization projects over the past year have already impacted the revenues of IT companies in Gujarat. The advent of generative AI technology has exacerbated the situation, as automated tools can perform tasks such as coding, content writing, and design. As a result, businesses in search engine optimization (SEO), digital marketing, content creation, and web application development are losing revenue.
“Automation tools have already reduced the demand from foreign clients for traditional outsourcing projects, like web application development. With AI and other new tech offering end-to-end solutions for digital projects, the need for outsourcing is dropping even more. To stay in the game, tech companies here need to innovate, train their workforce, and improve their services,” said Pranav Pandya, chairman of the GESIA IT Association.
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 create specialized content and digital marketing tools, develop new software, mobile apps, and websites, as well as create blogs, tutorials, and promotional videos.
“These tools will make for 1% of the total project cost levied by IT firms in Gujarat that execute the project. 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.
Geopolitical factors have also played a role in constraining the IT sector’s growth. Economic and political instability in the US and Europe has led to budget constraints. “Clients are aware of the importance of tech innovations and what it costs. However, project’s economics are a concern,” said the founder of a Rajkot company that depends on outsourcing work, refusing to be named.
Workforce expenses weigh heavy
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.
The rapid evolution of technology poses a significant challenge for many IT firms, especially those predominantly engaged in outsourcing. Tejinder Oberoi, past chairman of GESIA, underscores this, stating, “Clients now demand more in terms of deliverables from IT companies while technology is advancing rapidly. Skill upgrades are crucial.
For instance, Artificial Intelligence now empowers developers to write code. Thus, companies relying solely on labour cost advantages and price competitiveness are under pressure, lacking a workforce with fresh skills and domain expertise,” he said.
IT companies have gone through these cycles of technology change much faster and regularly. “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,” adds a senior industry insider.
‘Constant skill upgradation is a must’
IT industry stakeholders heavily emphasize the timely upgradation of workforce skills and offerings to stay relevant in times of fastchanging technologies.
“Technologies like AI, IoT, business intelligence (BI), and data analytics, among others, are inevitable for the future of the IT industry. Therefore, the onus is on academia and industry to constantly upgrade the workforce’s skills and carve a niche for futuristic technologies,” explained Pandya.
Industry experts anticipate a surging demand for adept engineers due to the evolution of AI tools. To meet this demand, universities must design specialized courses to equip aspiring professionals with the skills to operate AI tools effectively.
The IT sector’s slowdown has also cast a shadow on oncampus hiring. Nilesh Gambhava, a professor at a Rajkot-based private university, said, “Every year, 50-60 companies would participate in campus recruitments. This year, the number has halved.”
—With inputs from Parag Dave

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