Hexaware Technologies is seeing artificial intelligence reduce revenue from parts of its traditional IT services business, although the company expects new AI-led offerings to offset the pressure, Chief Financial Officer Vikash Kumar Jain told TNIE.
Jain was talking on the sidelines of the inauguration of a new delivery centre at Gift City. The centre plans to employ about 1,000 people in the next three years, from the existing 250.
"The clients are paying less because whatever was the effort which was required earlier, from a Q1 perspective, is deflated because you can do more by use of technologies and tools,” he said when asked whether AI had started to cannibalise revenue from traditional IT spending.
However, he said the extent of the impact varies depending on the type of project and service line.
"If it's a project which is starting from base zero, which is a greenfield project, then the productivity is significantly higher or materially higher compared to if it's an existing programme or a project," he said.
Jain added that the AI-driven productivity gains are higher in software development and testing work, while demand for data-related projects is increasing as companies prepare their systems for AI adoption.
The economics of IT services are changing as AI reduces the effort needed to deliver existing projects, he said, adding that the company now views its revenue equation as a combination of existing work and new sources of growth enabled by AI.
The newer offerings, including agentic AI, vibe coding, legacy modernisation and zero-license solutions, are creating revenue opportunities that were not available during earlier technology cycles, he said.
"In the medium to long run, what we see is the tailwind from the newer revenues of growth in Q2 is going to far outweigh the deflationary pressure that we will have from a Q1 perspective," he said.
He added that clients are moving from experimentation with AI to production deployments.
"We are slowly seeing that the clients are pivoting from experimentation to real enterprise-grade transformations," Jain said.
The company is also seeing changes in commercial models. "We are seeing a move from people-based pricing to outcome-based pricing for the client," he said.
Jain said AI is being used internally across finance, legal, hiring and training functions. Depending on the software development lifecycle, productivity improvements can range between 10% and 20%, he said.
While AI creates pressure on existing demand, Jain said Hexaware expects overall demand to continue growing and added that headcount growth would depend on business volumes.
