JP Morgan said that generative AI models like ChatGPT will deflate the pricing in the Indian IT market and slow down the market gains in the short term.
On Friday last week, analysts from JP Morgan told their clients that ‘ChatGPT is likely to deflate legacy services the most and application services the least.’
The analysts said that firms like Deloitte and Accenture, which use generative AI broadly, will have an upper hand over Indian IT companies like Wipro and Infosys in the coming times. They added that generative AI can act as deflation drivers on legacy services due to lower pricing. The generative AI-based consulting firms will have an advantage as Indian companies focus on staff retraining and upgrading their services.
ChatGPT and Its Impact on Indian IT Market
ChatGPT by OpenAI, the artificial intelligence company, has taken the world by storm. Novice users and industry experts alike are amazed by the chatbot’s ability to write poetry, debug codes, and have meaningful conversations on any topic. This led to OpenAI signing a $10 billion contract with Microsoft in early Feb.
The immediate success of ChatGPT has pushed other global tech companies like Baidu and Alphabet to develop their in-house AI generative applications. These companies have already announced their intentions.
In this scenario, JPM said that IT Indian companies might be at a disadvantage until they realign their services and prices with the changes in the competitive market. At the same time, the analysts also said that companies like Infosys and TCS (Tata Consultancy Services) could be better equipped to re-train the staff faster and in smaller groups as they already have good hiring and training infrastructure in place.
Short-Term and Long-Term Impact
However, this deflation is not likely to have a long-term impact like eradicating jobs. This new development will more likely be the cause of changes and evolution in the IT job market. Employees will have to upgrade their skills and knowledge to work with generative AI tools. Furthermore, the new chatbots will assist employees in becoming more productive at work and reduce expenses.
One major drawback of the AI generative model is the deflation in pricing. The study mentioned that many productivity drivers turned out to be deflationary pricing drivers during the last two decades. The study also notes that various companies have already begun experimenting with ChatGPT and OpenAI. They have been integrating their systems with ChatGPT/ GPT3.
While the current shift in trends may give global consulting firms more benefits and advantages over Indian IT firms, this impact is highly probable to be limited to the short term. Once Indian IT consulting companies streamline their services and re-train the staff, the market trends are likely to shift again. And since large Indian companies are already equipped to handle such changes, things aren’t entirely bleak for IT employees.
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