In an exclusive interview with CNBC-TV18, Sachdev noted that Indian IT service providers are experiencing a fundamental shift as AI agents increasingly handle tasks previously performed by large offshore teams. He emphasized that companies that do not adapt promptly may face significant challenges during this transition.
“I think any leader of a services company who overlooks this is making a mistake. The warning signs are unmistakable,” Sachdev stated.
“The cost-arbitrage model will not be a sustainable long-term strategy.”
His comments come as companies worldwide ramp up their investments in AI, focusing more on automation, efficiency, and outcome-based pricing rather than traditional labor-intensive service models.
Gajen Kandiah, CEO of Rackspace Technology and a former IT services executive, shared similar concerns, indicating that service providers may encounter considerable disruption in the near future.
“Services companies are likely to feel significant pain before things improve, as this is a fundamental change,” Kandiah remarked.
Describing the extent of this shift, Kandiah pointed out that AI agents could drastically cut the need for large offshore workforces.
“If you currently have 100 employees doing work, with 90 of them in India, and now those 10 onshore, aided by AI agents, can perform the work of those 90, what happens next?” he inquired.
The executives contended that AI is not only transforming work processes but also changing the pricing and delivery of technology services. According to Sachdev, businesses are increasingly moving away from charging based on employee count or hours worked, transitioning to outcome-based commercial models that leverage AI.
“This enables companies to price based not on a per-seat, per-hour, or per-person basis, but rather on a per-outcome basis,” he explained.
Despite the upheaval, Sachdev is optimistic that Indian IT firms can emerge stronger by successfully reinventing themselves. He noted that leading service companies are already shifting from traditional reselling and manpower-driven models toward developing proprietary AI capabilities.
He indicated that the next phase involves converting decades of industry knowledge into specialized AI models that can more efficiently deliver business outcomes.
“Capitalize on your expertise and turn it into a proprietary small language model,” Sachdev suggested, highlighting how service firms can monetize their domain knowledge in areas like financial services, insurance, and life sciences.
He added that successful firms might ultimately see enhanced growth rates and profit margins akin to software companies.
However, the transition is expected to be challenging.
“This is a complex transition requiring a CEO who is fully committed and able to move the company swiftly in this direction,” Sachdev stated.
“Some may not succeed, and we should be prepared for that.”
Watch the complete discussion here
While both executives recognized the potential for short-term job losses, they argued that new opportunities would arise around AI deployment, model training, and context engineering as enterprises increasingly integrate agentic AI systems.
For India’s IT services sector, they emphasized that the crucial challenge is not if AI will transform the industry, but how swiftly companies can adapt before the market advances further.
