Dear Readers,

Through this article, I am sharing my perspectives on the IT Sector stocks performances and its future. 

I may be 100% wrong. This is merely my own perspective based on my current knowledge in this sector.  And this post is based solely on the factors that I consider when observing the whole market in a complete domain based analysis. 

As the share prices of all the IT shares are continue to decline so sharply, many people are enquiring whether this is a good entry point at this point in time and more specifically, whether the market is going to start rising from this level.

For me, this is not the perfect/ suitable time to buy. I predict that the rise of AI technology will displace the jobs of many IT people; in fact, I mentioned this to my close friends as early as three months ago. I even discussed this with them during one of our conversations, and they too widely acknowledged that such a scenario is indeed much probable. I had anticipated that this factor would be the primary catalyst for a market downturn; however, the US-Israel- IRAN war intervened unexpectedly and triggered the market correction completely. Nevertheless, the underlying fundamental reason for this trend is the impact of AI and that remains unchanged.

As all you know, this AI technology can execute various tasks with so easy and efficiency, many IT companies will likely prefer to adopt and utilise this technology rather than hiring human personnel and to perform those same jobs with heavy costs.  Consequently, there is a significant risk that many individuals will lose their employment in this IT sector. Even for those currently employed, the job market is no longer going to be as open or vibrant as it had in the previous times; Given that these IT companies across the board are currently shedding jobs, it will take some more time for new employment opportunities to emerge as well. 

I can relate this to the problems that I had understood in the past also. 

Way back in the 1990s and early 2000s, when computers first arrived on the scene, many people protested against them, fearing that they would loose their jobs. However, as time went on, employment opportunities within the computer sector actually expanded, leading to the rise of a many number of software engineers. Software companies  experienced rapid growth during that period.

Now, the AI technology is emerging as the latest iteration of this technological evolution. Those who proactively acquire the necessary skills to master this technology would definitely establish their relevance and value in this sector and they will not face the risk of losing their jobs.

We have entered an era where a task that once required a hundred people to complete and now this can now be done easily using a single and simple application. Therefore, it is enough to have just one IT engineer who knows how to effectively leverage this technology to get the work done; for the remaining 99 people, the result will inevitably be job loss.

It has been quite some time since all the countries began its transition toward a consumption-driven culture. In major metropolitan areas across the globe, the number of software engineers runs into the hundreds of thousands. If, suddenly, half of them were about to lose their jobs, how would they manage to repay the loans they have taken out?

There is a high probability that they would default on their loan repayments, which would, in turn, create significant pressure on the Finance and banking sector.

Furthermore, instead of paying salaries to a workforce of 100 people to complete a specific task, IT companies may opt to purchase an AI application at a very lower cost; they could then employ just one or two individuals to oversee the AI ​​tool and manage the workflow.

Consequently, the substantial sums currently paid out as salaries by IT firms would effectively be retained as ahandsome revenue. However, this transition is expected to take approximately two years from now. I believe that during this interim period, the IT companies are unlikely to generate substantial profits also. 

IT firms have not invented anything fundamentally new as of now. We primarily operate within the service sector. Since we provide services to global IT giants at competitive rates, we secure projects that generate employment opportunities and sustain our workforce.

Now that at ow-cost AI applications can perform these very tasks, it remains uncertain whether Indian firms will continue to secure such projects. Need to wait and watch. This poses a significant challenge especially Indian IT companies. I anticipate that this situation will negatively impact both the revenue and profitability of these IT firms.

Those who lose their jobs may also face delays in finding new employment immediately. India could potentially experience a minor economic downturn, which would adversely affect both the IT and banking sectors and particularly private sector banks. 

I remain optimistic, but however, that within three to five years from now, our workforce would tend to adapt to collaborating with AI tools; this will lead to the creation of new employment opportunities that we had in the past and these sectors will once again resume their growth trajectory.

I am not an IT professional myself. Those currently working within the IT sector would likely possess a more accurate understanding of this current situation; it would be valuable to hear their perspectives on the matter.

It may seem that though I am engaging in excessive speculation.

I would completely be just as happy if this turns out to be nothing more than a figment of imagination.

But what if it happens actually?J

Just think and act wisely keeping all these above points in mind!