AI Bust Expected Within 12 Months But Rebound Will Be Bigger Than Internet Era, Says NTT Data CEO

AI 'Bust' Will be Followed by Huge Bounceback: Abhijit Dubey

NTT Data Inc will invest $1.5 billion in India through FY27, over and above the $3 billion it already spent towards expansion in the country, Abhijit Dubey, CEO of the global data centre and IT services company, told ET in an interview. The new instalment is part of an $11-billion global investment plan, said Dubey, a rare India-born executive to helm a Japanese multinational. The $30-billion IT services and data centre arm of the $100-billion NTT Group controls about 30% of India's data centre market. Dubey warned that the AI "boom" is headed for a "bust" because enterprise demand is not keeping pace with the capital rush into AI infrastructure, leading to "overcapacity" in data centres. But he added the bounce back would be huge. "At some point, they have to start converging... I think within the next 12 months, we will see a little bit of a correction, but it's going to be short-lived," Dubey said. "The bounce back in AI will be much bigger than the Internet era and much shorter in time."On the impact of the trade tariffs on most countries imposed by US President Donald Trump on NTT's business, he said while "there has been a pause on some of the spending, especially around digital, etc...we are starting to see a little bit of normalcy return." Dubey said the data centre business has seen significant uptick while the IT services arm is also seeing a boost due to huge refresh cycles by the organisations who feel their infrastructure is not ready for AI. He expects normalcy to continue into 2026, "barring some new stuff coming, which you can't predict." Weighing in on whether the $283-billion Indian IT industry stands to lose ground due to the rise of AI-led coding and automation, Dubey said AI is rather an opportunity for market share gain. While global IT spend stands at $5 trillion, non-IT costs for businesses are $35-40 trillion, he noted. Even a 1-2% productivity improvement in this non-IT spend would unlock an addressable market far larger than today's services industry, he said, calling it a "massive expansion opportunity." When asked about workforce restructuring on the IT side, Dubey said NTT will not cut roles. "We have grown our headcount in India and we are hiring more this year than we have in the past." NTT Data is among the top 10 IT services and consulting companies globally with annual revenue of $19 billion from this segment. Dubey was candid enough to admit that the company will "definitely" lose some market share in the data centre space, given the flood of big-ticket investments coming from the likes of Google, Meta, AWS and Microsoft. NTT Data, however, expects to retain its relevance and leadership. "Just putting in capital doesn't make you an operator overnight," he said. On India's AI startup ecosystem, Dubey said, competing with the US, especially San Francisco, remains difficult because capital, customers, and innovation are overly concentrated there. "Most of the AI innovation is centred in Silicon Valley. Access to capital and access to US customers is unparalleled... That has to be fixed in India," he said. Even as hyperscalers pour billions into frontier AI model training, NTT is deliberately avoiding that segment, focusing instead on inferencing needs, which Dubey calls a "less risky" and more sustainable business with better long-term economics. "We've always stayed very true to enterprise inferencing... Even if there is a short-term overbuild, (in the) long term, it absolutely will be used up." He noted that fears of overinvestment in data centre capacity are overstated because while chips have a 3-4 year life cycle, data centres remain productive for 15-20 years. Recently, Google committed $15 billion to build a 1 gigawatt AI hub in Andhra Pradesh along with Airtel and Adani Group, marking its largest infrastructure push in Asia yet. Tata Consultancy Services and TPG invested in a new data centre arm, committing investment up to $2.1 billion. Digital Connexion - a three-way venture between Reliance Industries, Brookfield and Digital Realty - has committed $11 billion to build a gigawatt-scale campus in Andhra Pradesh. Microsoft too has committed $3 billion in investment in India. Asked why enterprise AI spending is lagging infrastructure investment, Dubey said organisations must overhaul 50-60 years of legacy systems, upgrade networks, fix data pipelines, and spend "as much on change management as on technology" to see meaningful outcomes. He expects adoption to accelerate well before five years, provided enterprises focus and build the necessary foundations. Most of the AI innovation is centred in Silicon Valley.. Access to capital and access to US customers is unparalleled... That has to be fixed in India.

AI bubble to be short-lived, rebound stronger, NTT DATA chief says

MUMBAI, Dec 5 (Reuters) - A potential artificial intelligence bubble will deflate faster than past tech cycles but give way to an even stronger rebound as corporate adoption catches up with infrastructure spending, the head of Japanese IT company NTT DATA Inc. said. Despite worries around supply chains, the direction of travel is clear, CEO Abhijit Dubey said in an interview with the Reuters Global Markets Forum. "There is absolutely no doubt that in the medium- to long-term, AI is a massive secular trend," he said. "Over the next 12 months, I think we're going to have a bit of a normalisation ... It'll be a short-lived bubble, and (AI) will come out of it stronger." With demand for compute still running ahead of supply, "supply chains are almost spoken for" over the next two to three years, he said. Pricing power is already tilting toward chipmakers and hyperscalers, mirroring their stretched valuations in public markets, he added. AI has triggered the biggest technological shake-up since the advent of the internet, fuelling trillions of dollars of investment and eye-watering equity gains. But it has caused shortages of memory chips, drawn regulatory scrutiny, and created growing unease over the future of work. Dubey, who is also the firm's chief AI officer, said his company has begun rethinking recruitment strategies as AI reshapes labour markets. "There will clearly be an impact ... Over a five- to 25-year horizon, there will likely be dislocation," he said. However, he added that NTT DATA continues to hire across locations. Speakers at the Reuters NEXT conference in New York discussed how AI may upend work and job growth. AI startup Writer Inc.'s CEO May Habib said customers are focused on slowing headcount growth. "You close a customer, you get on the phone with the CEO to kick off the project, and it's like, 'Great, how soon can I whack 30% of my team?'," she said. Still, a PwC survey of the global workforce released in November suggests the reality of generative AI usage has yet to match boardroom expectations. Daily use of GenAI remains "significantly lower" than widely touted by executives, PwC said, even as workers with AI skills commanded an average wage premium of 56% -- more than double last year's figure. PwC also flagged a widening skills gap, with about half of non-managers reporting access to training resources, compared with roughly three-quarters of senior executives. (Join GMF on LSEG Messenger for live interviews: ) (Reporting by Divya Chowdhury in Mumbai; Editing by Joe Bavier)