Nasscom Chairperson Srikanth Velamkanni has recommended using open-source AI models to test India’s critical systems. This strategy aims to strengthen cybersecurity and reduce reliance on restricted foreign AI technology. Investors should observe how this shift affects the adoption of artificial intelligence within the $280 billion Indian IT services sector.
What Happened
Srikanth Velamkanni, the Chairperson of Nasscom, has recommended that India should integrate powerful open-source artificial intelligence (AI) models to stress-test the nation's critical infrastructure. This approach, he suggests, would allow India to evaluate the safety and resilience of essential systems—such as financial networks and power grids—without being fully dependent on access to proprietary AI models from the United States, which may be subject to future export controls.
The Need for Cyber Resilience
Critical infrastructure requires constant monitoring to find potential security gaps. Velamkanni noted that India should not only focus on trying to secure access to a limited number of advanced foreign AI models. Instead, he believes India should utilize freely available, open-weight AI models, such as Kimi K2.7, GLM 5.2, and Qwen 3.7. These models are becoming increasingly capable of handling complex data analysis. By using these tools domestically, India can identify vulnerabilities in its own essential networks, improving the nation's ability to defend against cyber threats independently.
Impact on the IT Services Sector
For investors in Indian IT companies like TCS, Infosys, Wipro, HCLTech, and Tech Mahindra, this discussion touches on the broader future of the $280 billion IT services industry. There is a common fear that AI will reduce the need for human software developers, hurting the revenue and margins of these companies.
However, Velamkanni highlighted a concept known as the Jevons paradox to explain why the impact might be different. In simple terms, when AI makes coding or software development more efficient and cheaper, companies tend to demand significantly more software, not less. This increased demand for software could create new revenue streams and opportunities for technology workers, potentially offsetting the short-term slowdown in hiring for entry-level roles.
Infrastructure and Strategic Growth
Beyond software, the AI sector in India is being supported by multi-billion-dollar investments from global tech giants like Microsoft, Amazon, and Google. These companies are building data centers and AI infrastructure within India. This is a positive for the economy, as it improves local data processing speed and fosters the growth of supporting industries. Hosting this infrastructure locally strengthens India’s position in the global technology ecosystem and ensures that critical digital assets remain within domestic borders.
What Investors Should Track
Investors may monitor a few key areas following this recommendation. First, track how quickly Indian IT firms integrate AI-driven recruitment and coding tools into their operations, as this will influence their margins and efficiency. Second, watch for any shifts in domestic cybersecurity spending, as companies and government bodies may increase their budgets to secure infrastructure against new threats. Finally, the ability of the Indian workforce to upskill in AI fluency will remain a critical factor in determining how well these companies navigate the changing landscape of software services.