Techade Midpoint: AI Boosts IT Productivity, Curbs Hiring, Reshapes Costs

• Five years into the "Techade," AI is primarily driving productivity gains and reshaping cost structures in Indian IT services, rather than just accelerating topline revenue.
• The industry has shifted from scale-led to intelligence-led delivery, with AI embedded directly into applications and workflows, altering delivery economics.
• AI adoption significantly boosts productivity by automating coding, testing, and maintenance, leading to reduced engineer requirements per project and slower incremental hiring.
• While productivity rises, margins have stabilized (17-19% in FY24-26) as efficiency gains are partially passed on to clients for cost optimization.
• Client demand is shifting from large, labor-heavy contracts to outcome-led transformation, efficiency, and platform modernization, leading to fewer but larger deals.

Why It Matters: AI is fundamentally transforming IT services by enhancing productivity, controlling headcount, and optimizing costs.