Kolkata: Is the panic among investors in Indian IT sector, especially that of structural obsolescence due to the AI sweep, coming to an end? The apprehension that the revenues of traditional IT services firms could shrink in the light of AI-powered tools doing wonders triggered a massive fall in stocks in both the US and Indian stock markets, which pulled down all bellwether stocks from Infosys to TCS, Wipro to HCL Tech. However, at long last the tide appears to be turning. On Friday, the Nifty IT index climbed by nearly 2% signaling buoyancy among investors. let’s have a look at the factors.

Robust performance of Accenture

Nothing succeeds like success, goes the old adage. And one of the powerful triggers behind rekindling investor interest seems to be Accenture’s strong earnings for Q2FY26. The company has also rekindled hopes by raising the earnings guidance for the full-year. It sends a clear message that contrary to earlier apprehensions, AI is not going to trigger a quick erosion of the business models of traditional IT firms and that demand remains resilient.

Hope on the hiring front

One of the rays of hope is that hiring seems to be resuming in the beleaguered sector. The attrition rate has reportedly declined below 15%, which is a bright spot for the industry. Accenture has hired as many as 85,000 AI professionals. The rules of hiring seems to be shifting in the industry. Companies appear to be shifting focus from academic degrees to specific skill sets. Demand for AI engineers, cybersecurity experts and data architects is growing. Generic job roles are reducing and that for specific skills is rising.

Brokerage reports offer hope

Major brokerage firms such as CLSA also feel optimistic. These reports state that companies are leveraging AI to generate new value and not to just cut costs. This shift is generating new opportunities for growth in the IT sector. The apprehension of obsolescence that existed within the IT sector seems to be gradually subsiding. AI is no longer perceived as a threat, but could emerge as an opportunity for the sector.

What Hong Kong-based brokerage CLSA said is music to the ears of investors. In its report, CLSA trashed concerns over disruption by AI in Indian IT firms. It could not find any evidence that client renewals are coming with of pricing pressure in spite of perceived threats from Anthropic and OpenAI with their AI arsenal.

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