OpenAI's ChatGPT has been in the news since it was launched in November last year. Till now ChatGPT has reached 100 million monthly users, cleared MBA exams, written product descriptions for marketing professionals, stand-up scripts for comedians, codes for engineers, and even love letters.

Looking at the potential of ChatGPT tech giant Microsoft is in talks to invest $10 billion dollars in OpenAI and Google recently launched its own AI technology Bard as a competition to ChatGPT. When the generative model is getting so much traction amongst the tech giants the big question is what can be the impact on the Indian IT industry?

J.P. Morgan analysts have released a report indicating that the widespread implementation of generative AI models, such as ChatGPT, will negatively impact market share and pricing for Indian IT companies in the short term.

As per the report, Generative AI has been noted as a "deflation driver" in the near term as it will compete with legacy services on pricing, necessitate staff retraining, and drive a loss of competitiveness. ChatGPT is expected to deflate legacy services the most and application services the least.

Notably, there have been several historical drivers of productivity that have ended up being deflationary drivers on pricing over the last 20 years.

Also read: Google Bard — What is this conversational AI service and how is it different from ChatGPT?

Which companies are at risk?

The report states that consulting firms like Accenture and Deloitte will gain market share over Indian IT companies such as Infosys Ltd and Wipro Ltd in the near future.

J.P. Morgan predicts that among Indian IT companies, Infosys and Tata Consultancy Services will retrain their staff more efficiently than their smaller peers due to their strong graduate hiring and training infrastructure.

What did ChatGPT have to say on this?

With all the speculations we thought we will ask ChatGPT itself on can it deflate legacy services.

Here is what the ChatGPT said: “As an AI language model, I do not have the ability to directly deflate or impact legacy services. However, as more advanced technologies like AI continue to evolve and become more accessible, they may provide more efficient and cost-effective alternatives to some legacy services. This could lead to a natural shift in the market as companies and individuals adopt newer technologies. Additionally, AI may also enable the development of new and innovative services that were not previously possible, further driving the evolution of the market,”

As ChatGPT and AI generative tools like it are capable of coding and providing IT services which legacy IT companies provide, the tool can be a matter of concern for Indian IT companies and it is worth seeing how it turns out in the future.

Meanwhile, Indian IT companies were facing some pressure on the stock market on February 13. Infosys is trading down by 2.4 percent, Tech Mahindra is down 1.2 percent, TCS is trading at Rs 3,481 down 1.54 percent and Wipro is trading down by 1.08 percent from the previous close on the BSE today.

Also read: Opera, Alibaba, Tencent and other Chinese tech firms working on ChatGPT-style technology — Here is the list

First Published:Feb 13, 2023 12:54 PM IST