Hexaware CEO Predicts AI Will Lower IT Project Costs and Reduce Headcount Needs

Artificial intelligence could reduce the price of routine IT projects by as much as 25 per cent, according to Srikrishna Ramakarthikeyan, Chief Executive Officer of Hexaware Technologies Ltd. Speaking in a recent interview, Ramakarthikeyan highlighted the ongoing transformation within the outsourcing sector, which is historically known for labor-intensive operations.

As AI improves efficiency, customers could demand 20 per cent to 25 per cent lower fees for services Hexaware currently delivers. Furthermore, the company will require fewer personnel to complete the same tasks as automation takes over routine duties. Ramakarthikeyan noted that while AI is deflationary for certain services, it does not mean the firm will shrink. Instead, the productivity gains will allow Hexaware to pursue new revenue sources and handle work it has not traditionally managed.

Hexaware competes alongside major industry players like Infosys Ltd. and Wipro Ltd. within India's $280 billion outsourcing sector. More than half of Hexaware's revenue is already derived from AI-infused work, a proportion the CEO expects to grow to roughly 80 per cent within three years.

Shares of Hexaware have fallen by over 20 per cent since its initial public offering early last year, reflecting investor evaluation of AI's impact on the business model. Larger competitors including Infosys, Wipro, and Tata Consultancy Services Ltd. have experienced similar downward trends over the same period.

Major IT firms have adjusted their hiring strategies in preparation for AI integration. Traditionally, Indian IT companies recruit hundreds of thousands of graduates annually for projects with multinational corporations, banks, and governments. Moving forward, Hexaware is likely to hire fewer entry-level engineers while actively seeking professionals with specialized AI skills.

Ramakarthikeyan mentioned that while clients can reduce their own internal IT teams due to automation, Hexaware has not lost existing contracts to clients performing the work independently via AI. However, the technology is forcing the company to reconsider traditional billing methods. Because most industry sales depend on billable hours, productivity gains do not automatically translate to significant revenue surges. Consequently, Hexaware is shifting toward fixed-price and platform-based contracts, while anticipating that AI tokens and running costs will become standard components of technology budgets.

Additionally, the company is developing products aimed at eliminating software license costs and building AI-native offerings to capture spending outside traditional IT services.

"The integration of artificial intelligence into IT services marks a fundamental shift in how business value is delivered and priced. As routine tasks become automated and labor costs decrease, traditional billing models based on billable hours will inevitably face pressure. IT and outsourcing companies must adapt by pivoting toward fixed-price contracts, platform-based offerings, and high-value services. For founders and business leaders in the tech ecosystem, this transition underscores the importance of building specialized AI capabilities and finding new revenue streams rather than relying solely on traditional headcount scaling." — Dr. Shishir Gupta, Founder & CEO, StartupLanes