Will AI replace India's IT sector? A research study by Viral Citreni has flagged TCS, Infosys, and Wipro as being at risk.

 The Citing Report: A Hypothetical Worst-Case Scenario. The Citrini Research report outlines a chilling, if hypothetical chain reaction. It argues that the core value proposition of the Indian IT industry—providing a large pool of skilled developers at a fraction of Western costs—is under direct threat. The logic is simple: if AI coding agents can do the work of a team of developers for the "marginal cost of electricity," why would global clients continue to pay for human capital? The report's hypothetical scenario for 2028 is stark: Mass Contract cancellations: TCS, Infosys, and Wipro face accelerating contract cancellations as clients shift to cheaper, AI-driven alternatives. The evaporation of the services surplus—built on over $200 billion in annual exports—leads to an 18% depreciation of the Indian rupee against the dollar. The report describes a vicious cycle where companies lay off workers to invest in AI, which in turn displaces more workers, reduces consumer spending, and weakens the very companies that sell to those consumers. This is not a forecast that the report's author, Viral Citron, claims is inevitable, but it is a powerful thought experiment that highlights the fragility of a business model overly reliant on manual, repetitive coding tasks. Market Jitters: The "P(AI)n" is real. 

 Global financial firm Jefferies recently turned cautious on the sector in a note aptly titled "P(AI)n Not Over Yet; Stay Selective". They warn that AI will structurally alter business models, leading to "deflation" in traditional managed services, which account for 22-45% of large IT firms' revenue. Jefferies downgraded several major stocks, including Infosys, HCLTech, and TCS, citing that the risk-reward ratio is now unfavourable. They estimate that in a downside scenario, valuations (price-to-earnings multiples) could see a further derating of 30-65%. This analyst's pessimism reflects a genuine concern: the core "commodity" business of application management and maintenance is shrinking. The Industry Fights Back: Why "Wideout" is Unlikely Despite the alarming headlines, the CEOs of India's top IT firms are pushing back against the narrative of a sector-wideout. Speaking at the India AI Impact Summit 2026, they laid out a compelling counter-argument. The "Long Tail" of Enterprise Adoption TCS CEO K Krithivasan argues that the role of system integrators will not disappear because large enterprises run on complex, untidy, legacy systems. AI cannot simply be plugged in. "I do not envisage a significant shrinkage of work," he stated, pointing out that only 30-40% of enterprises have even fully completed their cloud adoption. There is a "long tail" to AI adoption, requiring human expertise to integrate new AI tools with decades-old mainframes, databases, and processes.

The Infrastructure Opportunity HCLTech CEO C Vijayakumar highlighted a massive, often-overlooked opportunity. The huge capital expenditure by Big Tech companies on data centres and "AI factories" will necessitate a global refresh of IT infrastructure over the next 5–8 years. This creates a massive services opportunity in setting up, managing, and securing this new hardware. Furthermore, he pointed to emerging fields like Physical AI—which combines AI with robotics and the internet of things—as a potential $1 trillion revenue source. Titans Transform: The New AI-First Strategy. Far from being passive victims, companies like Infosys, TCS, and Wipro are aggressively pivoting to become AI-first organisations. Infosys has unveiled a comprehensive "AI First Value Framework" to tap into what it sees as an incremental $300-400 billion AI services opportunity by 2030. This is not just about using AI; It is about selling AI expertise. Their strategy covers six areas, including AI strategy consulting, preparing client data for AI, redesigning business processes with AI agents, and even "Agent Legacy Modernisation"—using AI to modernise old systems. Crucially, Infosys is collaborating with leading AI companies like Anthropic to build tailored solutions for regulated industries like telecom and financial services. TCS is taking an even more radical approach. CEO Krithivasan has told his 600,000+ employees to actively recommend AI-first solutions to clients, "although it means cannibalising our revenues". The logic is forward-thinking: if TCS does not automate its own services, a competitor or the client will. By proactively driving efficiency, TCS believes it can free up client budgets for new, innovative projects. 

This strategy seems to be working, with TCS reporting annual AI revenue reaching $1.8 billion. However, this shift has a human cost; the company has reportedly seen significant workforce restructuring, with thousands of roles impacted as AI takes over routine tasks. Wipro is also reinventing itself, launching a new operating model that combines advisory services with AI-powered execution. Their goal is to move from being a "doer" to a strategic partner that connects "boardroom strategy to scaled operations". The Future of Jobs: Evolution, not just expansion.Just Extinction. Just expansion. The most visceral fear surrounding AI is job loss. While the Citing report and recent layoffs fuel this anxiety, industry leaders argue that the nature of jobs will change, not vanish entirely. New Roles Will Emerge: TCS's Krithivasan believes there will be more jobs in areas like context engineering (teaching AI the specific context of a business), cybersecurity, and managing AI systems. There is concern that AI will eat the tasks traditionally given to fresh graduates (basic coding, testing, support). However, this could force a positive change, where entry-level talent is quickly upskilled to work with AI, focusing on higher-value analysis and problem-solving. The "Orchestration" Partner: Nasscom President Rajesh Nambiar notes that the industry's role is shifting from a mere "implementation partner" to an partner". This means Indian IT will be responsible for orchestrating complex AI agents, data, and human expertise to deliver a business outcome, a task far too complex for a standalone AI tool. Conclusion: Will AI replace India's IT sector? The short answer is no. But it will undoubtedly transform it beyond recognition. The Citrini Research report serves as a valuable "wake-up call," highlighting the existential risk of clinging to the old labour-arbitrage model. The firms that will thrive—like TCS, Infosys, and Wirehair those that are already cannibalising their own legacy businesses to build new ones. The sector is moving from competing on the cost of people to competing on the sophistication of its intellectual property, AI platforms, and the ability to solve complex business problems. The pain of transition is real, as seen in market volatility and job restructuring, but the obituary for Indian IT is being written far too soon. The industry is not being replaced; it is being rebooted.