Bengaluru, July 27 -- At a time when India's $300-billion information technology (IT) services industry grapples with slowing growth, it is discovering that the biggest immediate impact of artificial intelligence (AI) is not necessarily higher revenues and improved productivity, but lower prices from stiff competition. "The slowdown in the market and the revenue compression are creating intense competitive pressure, which is driving prices down and putting pressure on margins," said Peter Bendor-Samuel, founder of Dallas-based IT advisory firm Everest Group. "This trend looks like it will continue for several years." Clients' demand for AI-driven productivity gains has triggered an intense price war as technology companies of all sizes slash prices to win deals from clients that often choose vendors based on the lowest bid they receive for projects. The pricing pressure is most acute in coding, application development and maintenance, where AI is automating a growing share of repetitive work. As a result, vendors are increasingly accepting lower billing rates per employee-the industry's traditional pricing metric. Industry insiders said pricing in application maintenance renewals, for instance, has fallen 4-5% over the past year as clients insist AI-driven productivity gains be reflected in contract values. Rather than hiring aggressively, companies are cushioning the impact of the pricing war by deploying more employees already on the bench, which is helping offset lower billing rates, according to Namratha Dharshan, chief business leader at Connecticut-based IT research and advisory firm ISG. "AI is definitely increasing pricing pressure between IT services companies because internally, companies are restructuring and macro pressures are forcing companies to keep costs low," Dharshan said, adding that Tata Consultancy Services's (TCS) layoffs last year were conducted to do away with talent that could not be reskilled and upskilled. Srini Pallia, CEO of Wipro, said pricing is also being impacted by how clients want to implement AI-over a shorter period of time or spread out over the tenure of a deal. "When you deploy AI quickly, the token costs also increase for our client. So, they are looking at the total cost of ownership. And that is something that we've been carefully working on," Pallia said during the company's post-earnings analyst call on 16 July. Tech Mahindra chief executive Mohit Joshi acknowledged growing pressure to promise aggressive AI-driven productivity gains in order to win long-term contracts, but said his company is refraining from engaging in major price cuts....