The AI Case Against Indian IT Ignores What Indian IT Actually Does

Slashdot

by msmash

February 26, 2026

AI-Generated Deep Dive Summary

The article discusses a fictional memo by short seller Citrini Research, which sparked significant market turmoil in February 2024 by claiming that AI coding agents have eroded the cost advantage of Indian IT developers to the point where their work is now as cheap as electricity. This led to a $10 billion drop in Indian IT stocks and an unprecedented 5.3% decline in the Nifty IT index, its worst single-day fall since August 2023. Despite this panic, the memo's core argument—that India's $205 billion software export industry relies solely on cheap labor—is outdated by nearly 15 years. The article highlights that Indian IT firms derive about 35% of their revenue from custom application maintenance, which requires specialized skills and cannot be fully replaced by probabilistic AI systems. Additionally, enterprise platforms demand deterministic outputs that AI cannot yet deliver wholesale. The analysis also points out that while AI may lead to a 14-16% decline in sector revenues, this represents a manageable challenge rather than an existential threat. The Indian IT industry has maintained steady growth for 24 years without a single year of decline, generating $200 billion annually and forming strategic partnerships with leading AI labs. These partnerships underscore the industry's adaptability and resilience in the face of technological disruption. Furthermore, the sector is poised to benefit from emerging opportunities at the intersection of services and software, potentially unlocking a new $1.5 trillion market. The article concludes by emphasizing that Indian IT's strength lies in its ability to collaborate with global corporations on large-scale modernization efforts. While AI poses challenges, it also creates new avenues for innovation and growth. The industry's proven track record of adaptability and its strategic positioning as a critical partner for U.S. corporates suggest that Indian IT is likely to weather the

Verticals

tech

Originally published on Slashdot on 2/26/2026