AI Disruption Clouds IT Outlook; Firstsource Only Buy: Girish Pai

• AI could trigger a structural reshuffle in the Indian IT services industry, creating new winners and losers, says Girish Pai of BOB Capital Markets.
• Pai compares current AI disruption to the offshore delivery shift, suggesting a material evolution of business models.
• Uncertainty surrounds future earnings and cash flows beyond FY27 due to AI adoption and rapid improvements in foundational AI models.
• Enterprise AI adoption is slow, with only 4-5% of sector revenues currently AI-linked, despite potential 15-20% productivity gains.
• Pai remains cautious on the IT sector, underweighting it due to potential AI-led deflation pressures; Firstsource is his only 'buy' rating.