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Below Quote on today's decline in IT stocks by Vinod Nair, Head of Research Geojit Investments Limited

"Today’s decline in Indian IT stocks was driven by stronger-than-expected US employment data, with a marginal decline in the unemployment rate, which has reduced expectations of an early rate cut by the US Federal Reserve. This pressure was further compounded by ongoing concerns around AI-led disruption in the sector.

AI is creating a structural shift in Indian IT services by reducing timelines and automating tasks, putting pressure on the traditional headcount-based outsourcing model. Layoffs are likely in routine-heavy areas as fewer people will be needed to deliver the same outcomes. Even ERP implementation, as highlighted by Palantir’s recent focus, is now vulnerable to AI disruption. Clients are shifting toward outcome-based pricing. In the coming quarters, AI adoption could create headwinds for deal wins, potentially impacting topline, making close monitoring of deal flow essential to assess its real impact."

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