AI will expand opportunities for Indian IT; luxury housing demand remains strong: BofA Securities

Synthetic intelligence could also be creating considerations round job displacement and pricing strain within the IT providers trade, however the greater image stays constructive, in keeping with Kunal Tayal, Director, Fairness Analysis at BofA Securities.

Chatting with ET Now, Tayal mentioned AI is more likely to create new income alternatives for Indian IT providers corporations over the subsequent few years, even because the trade navigates a transition interval marked by altering shopper expectations and evolving know-how adoption patterns.

Largest AI use instances

In response to Tayal, coding has emerged as one of many largest AI use instances since 2025, which has fuelled considerations that automation may cut back demand for conventional software program growth providers. Nonetheless, current advances by firms similar to OpenAI and Anthropic recommend that AI functions are quickly increasing past coding into broader enterprise processes.

“It’s actually on the enterprise course of facet the place IT providers firms ought to discover a new complete addressable market,” Tayal mentioned. He added that partnerships between AI platform suppliers and main IT providers corporations point out that service suppliers will stay an integral a part of the AI ecosystem moderately than being displaced by it.

One other main alternative may emerge from know-how modernisation. As AI reduces the price of implementing know-how tasks, enterprises might speed up digital transformation initiatives, creating extra demand for IT consulting and implementation providers.

Enterprise adoption of AI nonetheless in its early levels

Whereas enthusiasm round AI stays excessive, Tayal cautioned that enterprise adoption continues to be in its early levels. Many organisations are experimenting with AI, however large-scale deployment stays restricted as a result of considerations round information high quality, return on funding and operational readiness.

“The know-how continues to be at a nascent stage,” he mentioned, noting that adoption is more likely to evolve progressively moderately than by way of a sudden surge.On considerations that AI partnerships might grow to be commoditised as a result of a number of IT corporations are working with the identical know-how suppliers, Tayal argued that differentiation will come from how successfully firms combine AI options and construct proprietary mental property on high of current platforms. Corporations that develop distinctive AI-driven merchandise and capabilities may finally get pleasure from increased profitability and stronger aggressive positioning.

BofA’s evaluation means that the general market alternative created by AI may finally outweigh the disruption it causes. Whereas some current work could also be automated, new classes of demand are anticipated to emerge, resulting in a bigger addressable marketplace for the trade over time.

Gung-ho on residential actual property

Past know-how, Tayal stays constructive on India’s residential actual property sector regardless of considerations about affordability, wealth results and rates of interest.

He believes fears of the housing cycle peaking are overstated. Residence possession ranges in India stay comparatively low, leaving important room for long-term development. As well as, massive listed builders proceed to strengthen their steadiness sheets and develop market share, enabling them to outperform the broader trade even when total sector development moderates.

Luxurious housing, particularly, continues to face out. Tayal mentioned the choice shift in the direction of premium and luxurious houses that started 4 to 5 years in the past stays intact, with no clear indicators of reversal. Whereas affordability housing may finally get better, luxurious demand is predicted to stay stronger within the close to time period.

Development prices have risen by roughly 10%, creating potential margin strain for builders. Nonetheless, Tayal doesn’t count on builders to go these prices on to homebuyers. As a substitute, builders might offset the affect by way of different measures, together with changes in land acquisition prices and challenge economics.

For buyers, the message from BofA is twofold: AI stays a long-term development alternative moderately than an existential risk for Indian IT, whereas the residential actual property cycle, particularly within the luxurious phase, nonetheless seems to have room to run