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Srikanth Velamakanni, Co-Founder and Group Chief Executive of Fractal said the pain hitting Indian IT services stocks is temporary, predicting the sector's structural challenges will largely play out within 12 to 18 months as AI reshapes how technology work gets done.
Velamakanni said, “The demand for software for tech is only increasing. Companies are becoming more and more tech centric, tech intensive. I foresee that the best days of the tech industry are well ahead of us. It's just a short-term blip that companies have to find the ways to encounter and grow from.”
His comments came days after Accenture cut the upper end of its guidance, a move that sent IT stocks falling on Friday (June 19).
Velamakanni said he expects industry-wide revenue growth to remain in the low single digits this year, with a meaningful pickup roughly 12 to 18 months out as macroeconomic conditions — including the impact of conflicts in the West Asia — ease and companies emerge with new AI capabilities.
He said the world economy is growing at roughly 2% to 2.5% a year, while technology spending is growing at about 13% a year, leaving a wide gap that represents an expanding opportunity for the industry.
He acknowledged that much of that new spending is going toward infrastructure — referring to computing capacity and "tokens," the units that measure how much work AI systems process — rather than traditional IT services.
But he said services demand will eventually expand too, through a dynamic he described using the term "Jevons paradox": as AI makes each unit of work cheaper and faster to deliver, the total volume of work demanded rises sharply.
Velamakanni was clear that companies that stay undifferentiated will continue to struggle. He said firms need to be highly differentiated, incorporate AI, build products, and find ways to expand both revenue and margins over the next several years.
For full interview, watch accompanying video
Follow our live blog for more stock market updates
Velamakanni said, “The demand for software for tech is only increasing. Companies are becoming more and more tech centric, tech intensive. I foresee that the best days of the tech industry are well ahead of us. It's just a short-term blip that companies have to find the ways to encounter and grow from.”
His comments came days after Accenture cut the upper end of its guidance, a move that sent IT stocks falling on Friday (June 19).
Velamakanni said he expects industry-wide revenue growth to remain in the low single digits this year, with a meaningful pickup roughly 12 to 18 months out as macroeconomic conditions — including the impact of conflicts in the West Asia — ease and companies emerge with new AI capabilities.
He said the world economy is growing at roughly 2% to 2.5% a year, while technology spending is growing at about 13% a year, leaving a wide gap that represents an expanding opportunity for the industry.
He acknowledged that much of that new spending is going toward infrastructure — referring to computing capacity and "tokens," the units that measure how much work AI systems process — rather than traditional IT services.
But he said services demand will eventually expand too, through a dynamic he described using the term "Jevons paradox": as AI makes each unit of work cheaper and faster to deliver, the total volume of work demanded rises sharply.
Velamakanni was clear that companies that stay undifferentiated will continue to struggle. He said firms need to be highly differentiated, incorporate AI, build products, and find ways to expand both revenue and margins over the next several years.
For full interview, watch accompanying video
Follow our live blog for more stock market updates
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