Impact of ChatGPT on Indian IT sector Can be Severe: Says JP Morgan

The negative impact of chatGPT on IT companies will be short-termed, calling for effective staff retraining strategies

Seems chatGPT is on everyone's mind for its uncanny ability to perform a diverse set of tasks. But JP Morgan has something to add to it. On Friday, JP Morgan analysts released a report suggesting that widespread adaptation of generative AI models like chatGPT will affect the Indian IT sector negatively with respect to market share and pricing for Indian IT companies, at least in short term.

Competing with the traditional and legacy services, the report says, generative AI will be a "deflation driver". It will push companies into retraining staff contributing to a loss of competitiveness. The application services, on other hand, will experience a reasonable appreciation. "There have been various historical productivity drives that have ended up being deflationary pricing drivers over the previous 20 years," the study notes. Further, the report states, businesses have been experimenting with OpenAI GPT3 last year, and have already integrated chatGPT or GPT3 applications into their ongoing projects.

The release of chatGPT has generated so much curiosity and hope among investors too. Microsoft ended up investing a whopping $10 billion in ChatGPT, while other tech barons like Alibaba, Baidu and Alphabet announce their own chatGPT equivalents. Google, in response to chatGPT, released its rival AI chatbot BardAI. According to JP Morgan, among all Indian IT companies, Infosys and Tata Consultancy Services are likely to retain their staff compared to other mid-level companies as they follow gradual hiring and training protocols. As Generative AI takes a big leap into the traditional IT space, companies big and small are forced to adapt to its dynamics to thrive and sustain the competition in the market.

AI Chatbots, be it chatGPT, Ernie, Bing, or Bard are way too far from being the option to replace human tasks. They are meant to provide the best web search experience with strong language and grammar command of human language in addition to delivering contextually relevant information. However, many are finding them going wayward with hallucinations and incorrect facts. In spite of it, tech companies are betting big on it in money and kind. However, as generative AI will be implemented more broadly, consulting firms will have an edge in terms of market share compared to Indian IT firms, analysts at the brokerage said in a note to the clients.