India, Oct. 13 -- Artificial intelligence (AI) is beginning to change the economics of India's IT services industry. The same technology helping companies improve productivity and win new business is also reducing the effort, people, and costs associated with traditional services contracts. For IT providers, this means managing pricing pressure in existing business while finding new sources of revenue.

HCLTech's second-quarter performance highlights an early indication of how this shift is playing out. The company reported a 78% year-on-year increase in advanced AI revenue, stronger operating margins, and its second-highest quarterly deal bookings. However, CEO and Managing Director C Vijayakumar believes AI-led deflation in traditional ...