New Delhi [India], April 12 (ANI): AI models such as Anthropic's Mythos could pose disruption risks to the growth of India's IT services sector, according to a report by Kotak Institutional Equities.

The report said the model 'exhibits a step-jump in benchmark performance across software engineering tasks' and added that it 'raises near- to medium-term disruption risks for IT services,' particularly for companies with higher exposure to application services.

The brokerage noted that improvements in AI-driven coding could translate into real business impact. 'The realization of similar improvements in real-world scenarios risks turning our estimate of a 3-3.5% annual growth headwind for the industry... from prudent to practical,' the report said.

It added that such advancements could also increase downside risks if rapid capability gains continue in future AI models.

Kotak further said the model could 'increase efficiencies across all IT services segments' but warned that gains may not be evenly distributed. Stronger automation in coding could widen productivity differences, especially impacting application development services more than other segments.

At the same time, the report flagged pricing pressure risks. It said the development 'could pressurize the valuation multiples of IT services companies' and compound 'near-term deflation risks for services.'

However, Kotak also pointed to emerging opportunities for AI adoption. It expects 'an acceleration of opportunities, such as the modernization of legacy systems and data foundations, which will partially offset the revenue deflation impact.'

The report added that once such models are widely deployed, they could 'accelerate GenAI-driven business use cases, providing large new opportunities to Indian IT.'

The report further noted that AI-driven changes could reshape the sector's trajectory, adding, 'We expect Mythos to increase efficiencies across all IT services segments.' (ANI)