India, Oct. 22 -- Indian IT services companies have typically commanded a premium valuation due to their predictable earnings, cash generation and low capital intensity. With artificial intelligence disrupting the industry, while it opens doors to newer avenues of growth, it will also redefine the economics of conventional outsourcing contracts. The Nifty IT index traded at a P/E of 19.5 times, which is a discount of around 28% to its five-year median of 27.08 times. Interestingly, the discount narrows to just 4.6% against its 1-year median of 20.44 times. So it seems like the market has priced in a period of lower growth expectations, rather than just reacting to a single disappointing quarter.

The more important question is whether FY...