STOCKS | Citi Says India's IT Services Outlook Remains Under Pressure From AI

Citi said India's information technology services companies still face a tough outlook, despite a sector rally on Friday after Salesforce's earnings. According to Sina Finance, Citi analyst Surendra Goyal wrote in a research note that the impact of artificial intelligence is real from a medium-term perspective, and that the pace of its effect will depend on multiple factors. The bank expects short-term revenue growth in the IT services sector to remain in the low single digits. It said growth continues to be constrained by intense competition, productivity gains from AI enablement, and a faster expansion of global capability centers. Citi also said it has not seen much evidence so far for the view that customers are more likely to build systems themselves with AI, which would favor services businesses over software businesses.