Indian IT could lose out as automation speeds up, says Neuberger Berman

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Conrad Saldanha, Managing Director and Portfolio Manager at Neuberger Berman, said Indian IT services could face pressure as global automation accelerates. He warned that “Indian IT services may be a net loser due to automation” and added that companies “will have to disrupt themselves” to stay relevant. Saldanha said the shift in global hardware and software driven by artificial intelligence (AI) is already affecting traditional IT billing models. Coding tasks that earlier took weeks can now be completed in days. “There’s obviously a risk factor on your billing,” he said, noting that Indian firms built around time-and-material models must adapt. On India’s consumer tech and platform companies, he said valuations are being driven by scarcity of pure-play AI firms. He explained that India’s closed capital markets and rapid growth in digital platforms mean investors are “chasing growth wherever they can find it.” But he cautioned that some companies “can get disrupted” as AI reshapes the industry. On global markets, he does not see a major reversal in the AI trade. He said the current pullback is not a broad bubble. “This is here to stay,” he said, adding that investors must watch valuations but should note that companies like Nvidia and Broadcom are “cash-generating machines.” Saldanha said he prefers bottom-up opportunities and continues to hold earlier picks in power equipment and healthcare. He highlighted Voltamp, CG Power, and Apollo Hospitals as examples of sectors tied to long-term structural demand. He added that banking is becoming more attractive as concerns over loan growth and asset quality ease. He said large banks like HDFC Bank, ICICI Bank, Kotak Mahindra Bank, and State Bank of India (SBI) “look good” on valuation support. In technology, he prefers hardware and niche digital companies over traditional IT services. He cited Netweb Technologies on the hardware side and Aurionpro Solutions in software as names he continues to own. On mainstream IT services, he said growth is weak and margins flat, which keeps him cautious. Saldanha also said India’s electronics manufacturing story remains strong, with companies like Dixon Technologies, Kaynes Technology, and Amber Enterprises continuing to scale. While valuations have moved up, he said they still look attractive on a three- to five-year view. On relative global positioning, he believes India c...

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