AI Deployment Gap and India's IT Sector: Strategic Challenges and Opportunities

Indian Express - Explained · 20 Feb 2026 · 2 min read
Prelims · Economy Mains · GS3 Economy High relevance

Infosys Chairman Nandan Nilekani highlighted the 'deployment gap' in AI adoption, emphasizing Indian IT's role in bridging this gap through partnerships like with Anthropic, amidst concerns over AI's impact on India's $300-billion software services sector.

Key points

Deployment Gap: Nandan Nilekani redefined Clayton Christensen's 'technology overshoot' as a 'deployment gap', where AI's capabilities outpace businesses' ability to utilize them, presenting a strategic opportunity for Indian IT firms.

Infosys-Anthropic Partnership: Infosys announced a partnership with Anthropic to develop AI solutions for telecom, financial services, and manufacturing, marking a strategic shift towards AI-driven enterprise solutions.

Revenue Share: AI accounted for 5.5% of Infosys' revenue in Q3 2023, the first disclosure of its AI business scale, reflecting growing integration of AI in IT services.

Legacy Systems Modernization: Nilekani identified deferred modernization of legacy systems as a key challenge, with AI offering tools to integrate siloed systems from different eras, benefiting IT service providers.

Agentic AI: Enterprises are adopting agentic AI tools that operate with limited supervision, creating demand for customized solutions, a niche Infosys aims to exploit.

[GS3-Economy] The AI-driven shift from 'buy' to 'build' in tech spending could reshape India's IT exports, which contribute ~9% to GDP, necessitating policy support for skill upgrades and R&D.

Global Capability Centres (GCCs): GCCs, contributing 40% of India's services exports, face potential overlap with IT services due to AI, raising concerns about spillover effects on India's value-added services.

Policy Concerns: The government is evaluating AI's impact on outsourcing, intellectual property flows, and the competitive balance between GCCs and domestic IT firms.

Way Forward: India should establish a national AI skilling mission, incentivize R&D in enterprise AI solutions, and create a regulatory framework to ensure IT firms retain competitive edge in AI-driven markets.

Key terms

Deployment Gap

The disparity between AI's technological capabilities and businesses' capacity to deploy them effectively. For UPSC, this concept is critical for understanding how India's IT sector can pivot from traditional services to AI-driven solutions, impacting employment, exports, and economic growth.

Agentic AI

AI tools designed to accomplish specific goals with minimal human supervision. Relevant for GS3 (Science and Technology) as it represents the next wave of automation, with implications for job markets, productivity, and ethical governance of autonomous systems.

Global Capability Centres (GCCs)

Offshore units of multinational corporations performing strategic functions like R&D and analytics. For UPSC, GCCs are significant as they contribute ~40% of India's services exports, making their evolution under AI a key economic policy concern.

Legacy Systems Modernization

The process of updating outdated IT infrastructure to integrate with modern technologies. This is a governance challenge (GS2) as public and private sector inefficiencies in modernization affect India's digital transformation and AI adoption readiness.