Preview
Over the past 30 years, the IT services sector has consistently outperformed the broader sector, thanks to advancements in technology hardware that often result in the need for investment in software and IT services solutions. Additionally, the Indian IT services sector has benefited from the maintenance and development of older IT systems globally.
Key takeaways
- IT services has been a core driver of emerging markets (EM) technology performance historically and is a significant opportunity for the future.
- Services and solutions required to support increasingly complex IT infrastructure will help drive future growth in the industry.
- Artificial intelligence (AI) can further support innovation and growth in IT services.
- EM, especially India can fill the labour shortfall for highly-skilled, English-speaking talent in IT services globally.
In this paper, we discuss how emerging market companies could play a crucial role in the AI-driven technology cycle and that this will drive growth in all parts of the industry including semiconductors, infrastructure and IT services. The impact of increasing AI demand has already been felt in semiconductors and is beginning to bear fruit in infrastructure companies.
We believe that the largest unrealised opportunity lies within IT services as companies will have greater need and dependency on more complex and tailored solutions to service their new AI-enabled infrastructure. India’s resources of talent, cost benefit and location will help it continue to play a crucial role in the success of the services industry.
We are very excited for this opportunity to be realised, across not only domestic best-of-breed Indian companies but also the many foreign companies with growing Indian operations.
WHAT ARE THE RISKS?
All investments involve risks, including possible loss of principal. Please note that an investor cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges. Past performance is no guarantee of future results.
Equity securities are subject to price fluctuation and possible loss of principal.
International investments are subject to special risks including currency fluctuations, social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets.
Commodities and currencies contain heightened risk that include market, political, regulatory, and natural conditions and may not be suitable for all investors.
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There are special risks associated with investments in China, Hong Kong and Taiwan, including less liquidity, expropriation, confiscatory taxation, international trade tensions, nationalization, and exchange control regulations and rapid inflation, all of which can negatively impact the fund. Investments in Taiwan could be adversely affected by its political and economic relationship with China.