AI Shift, Spending Slowdown Pose Challenges for IT Sector

### Quick Summary
– India’s IT sector faces challenges from AI-driven efficiency gains and slower discretionary spending due to new US tariffs.
– The US President announced an additional 25% tariff, causing inflation and tightening of budgets in the American economy.
– Manufacturing, logistics, and retail verticals are expected to face the most visible slowdown in deal cycles by the September quarter.
– Indian software export growth may be directly affected as over half of its $190 billion annual revenue comes from US buyers.
– Kotak Institutional Equities highlighted that demand in sectors such as healthcare is under stress due to cost pressures, while AI-related investments dominate tech verticals.

### Indian Opinion Analysis
India’s IT sector has historically been sensitive to global economic changes. The dual impact of slower discretionary spending caused by US tariffs and shifts toward AI-focused investments appears significant. The dependence on American enterprises for a ample portion of software exports makes India’s IT ecosystem especially vulnerable to these developments. Furthermore, sectors like manufacturing, logistics, and retail are critical for deal volumes and could see delays or budget freezes during this adjustment period.

While efforts toward future-ready technologies like AI might offer long-term opportunities for growth within high-tech verticals domestically,immediate ripple effects on revenue streams cannot be ignored. Policymakers must monitor such external risks carefully since prolonged disruptions can affect employment metrics in a sector known for generating sizable jobs across India.[Read More](https://timesofindia.indiatimes.com/business/india-business/it-sector-may-be-hit-amid-ai-shift-slower-spending/articleshow/123174732.cms)