100x Growth Possible Despite AI Deflationary Pressures: NASSCOM Chairman Srikanth Velamakanni

The first thing is that tech has always been deflationary. This is one thing that we have to realize: that tech becomes cheaper over time, and that is perfectly okay because demand always expands faster than the tech becoming cheaper. So this is not something that is new or something that we need to be worried about. The thing we have to look at is that the overall growth is a function of both AI-related expansion and AI-related compression. And the balance of that is a net growth that you're seeing in the industry. Today you're seeing somewhat muted growth, but overall AI is a hugely positive, great growth-enhancing vector for the tech industry, and it's a matter of time when this will start to play out in AI expansion for all the tech industry and all the tech industry participants.

Yeah, number one is that yes, there's no denying the fact that growth has slowed down in terms of employment growth. For the last many decades, the tech industry has been one of the biggest employers in the country, also adding to employment growth every single year. The last couple of years, the tech industry has still been a net adder of employees, but the growth rate has slowed down. And the key point here is that one of those elements is around hiring of fresh graduates, which is where the maximum impact has been across the world, not just India. We have seen that entry-level jobs have been somewhat affected, partly because of AI and partly because of other reasons. Now, this is generally a structural change, and we expect that these things will sort of solve for itself in the next few couple of years. One of those things is that if you see tech spends, overall tech spends have been increasing. A lot of those tech spends have been going into AI capex, into data centers, and the infra layer or the chip layer in the overall AI ecosystem, and some of that has come at the expense of employee growth. But as these investments play out, we will see that employment growth will start to return to some levels of normalcy.

The first thing to realize is that the world needs thousand times more technology than it currently has. And you don't need to be an economist or do extensive research to figure this out. You will see that across the world, as enterprise users, when we use enterprise technology, it's extraordinarily clunky. So there's a lot of need for improving the overall technology user experience of tech in the world in general. So the world needs thousand times more tech. Now what's happening today is that AI is making tech easier, better, and cheaper, which means that yes, there will be compression related to AI, and that's a 10x compression. Let's say something that took 100 hours now only takes 10 hours, but then we have thousand times more work to be done. Therefore, overall there is a 100x growth that's still possible in a tech deflationary world. So this has been, this is not a new phenomenon. This has been happening for a long time, but AI is making it even more important and even more accelerated. And therefore, it is the biggest opportunity in front of tech companies to make use of AI and help big companies transform their businesses with AI. Enterprise AI is just beginning to take off this year. So we will see a huge opportunity for the tech companies in helping the biggest companies in the world reimagine every aspect of their business, their workflows with AI. Transform every process, product, and service with AI. This is a multi-trillion dollar opportunity. And the second big opportunity that the tech industry has is to help companies modernize their tech. The tech is so clunky. The value of the modernization industry is again multi-trillion. So these are enormous opportunities, and companies that make use of them, bring in the tech, and are able to price on an output or outcome basis can not only see revenue growth but also see margin expansion in the process.