New Delhi, Aug. 23 -- India's $250 billion information technology services sector is at an inflection point-one that could recast the main tenets of a powerhouse industry that employs as many people as the entire population of New Zealand or Norway.

Over-hiring following the pandemic years has given way to unprecedented layoffs, clients in key markets such as the United States remain reluctant to spend on discretionary IT services, and artificial intelligence threatens to upend the sector's core business model.

And yet, India's mid-size IT companies rather than the Big Five seem closer to navigating the AI disruption and global uncertainties. Investors in India's IT services sector need to closely watch the dynamics unleashed by these t...