NTT Data CEO warns AI bubble will burst soon, but predicts stronger rebound than internet era

AI to place India among NTT Data's top five markets

NTT Data sees sustained demand for IT infrastructure growth, driven by AI workloads and it plans to invest heavily beyond its Rs 2,400-crore Bengaluru data centre project and an overall Rs 4,000-crore outlay in the city. The company will also scale less capital-heavy services around applications, cloud and business process transformation in the country. India is set to join NTT Data's top five markets, supported by double-digit growth in both local and export-focused business, and the Japanese IT services and consulting firm will continue to build infrastructure and scale services in the country, senior executives said. Jan Wupperman, senior vice president for service assurance, data and AI in Asia Pacific, and Amir Durrani, global head for applications and business process services, said NTT Data sees sustained demand for IT infrastructure growth, driven by AI workloads. And it plans to invest heavily beyond its Rs 2,400-crore Bengaluru data centre project and an overall Rs 4,000-crore outlay in the city. The company will also scale less capital-heavy services around applications, cloud and business process transformation in the country. The executives said India's 7% GDP growth and fast-growing IT spend are the reasons for their bullish view. The country is already among NTT Data's top 10 markets, and the firm has about 40,000 employees in the country, serving Indian and overseas customers. Durrani cited the acquisition of Niveus Solutions, which brought in more than 1,200 Google Cloud engineers, as evidence that the company is still "scratching the surface" of cloud opportunities in India and using the capability as a global Google Cloud platform (GCP). The executives argued that talks of an AI bubble overlook strong, continuing demand in applications, services and cloud modernisation. Any AI spending reset will be uneven across segments, with network and infrastructure modernisation still necessary to unlock value, they said. As a result, NTT Data is prioritising app services, cloud, and "sovereign and private AI" in networked infrastructure as its main non-AI-buzz pillars in the India story, Wupperman said. The company, which describes itself as an AI-first organisation, is empanelled as an infrastructure provider under the government's IndiaAI Mission and is pushing GPU-as-a-service offerings. At its new innovation centre in Bengaluru, NTT Data is taking five 'sales plays' to market, anchored in what it calls 'agentic BPaaS': AI-native, domain-specific business process services that aim to redesign industry workflows. The initial focus is on healthcare, insurance and banking, where the company is building ground-up AI solutions that promise higher productivity, accuracy and value. The other plays include an AI-native contact centre platform that shifts from per-contact pricing to "per resolution", heavy use of AI for technical debt and legacy application modernisation, software-engineering models based on a "digital twin" of applications, and large-scale platform work around Salesforce's Agentforce. Wupperman said the innovation agenda is tied to measurable business value rather than "geeky" experimentation. Outcome-based and risk-sharing deals Both the executives said the single KPI they want Indian CIOs to track is value creation, whether through cost savings, revenue growth or compliance, and said many offerings are moving towards outcome-based commercial structures. They said NTT Data is already doing risk-reward sharing deals globally, including large contracts in North America where it has taken business outcome risk onto its own balance sheet. In India, they expect appetite for such models to grow as AI gets embedded into applications and back-office processes, with the company proactively positioning itself as a partner willing to share upsides and downsides. For AI pilots, NTT Data prefers "proofs of value" over traditional POCs and often advises clients to pause experiments and instead invest in foundational data and infrastructure to enable scalable, production-grade deployments. Data, sovereignty and regulation For regulated sectors such as banking, financial services and manufacturing, NTT Data flagged data sovereignty, privacy and security as the dominant pain points when moving to AI-driven operations. The company is steering these clients towards sovereign or private AI setups, but warned that standing up such environments for only a couple of use cases can become an investment hurdle without careful roadmap design and data-platform "plumbing". Wupperman said NTT Data follows a "secure by design" philosophy and remains fully compliant with national standards in every market, arguing that India's emerging data protection and AI policies actually play to its strengths because of its domestic data centre footprint and compliance capabilities. They also reported growing focus on AI operations (AIOps) to decide when to tune models, which models to use for which use cases, and how to manage ROI rather than only raw technical performance. Positioning with hyperscalers and startups With 22 data centres across cities like Mumbai, Pune and Chennai in addition to the new Bengaluru campus, NTT Data said all major hyperscalers use its infrastructure and that it operates in "coexistence" rather than competition with them. The company claims to be Microsoft's fastest-growing partner globally and also holds strong credentials with AWS and Google, wrapping these alliances into what it calls "360-degree balance-of-trade" partnerships that extend to SAP and ServiceNow. In Bengaluru, NTT Data wants to become the first choice for AI-native startups as well as large enterprises, pitching its agentic BPaaS, AI orchestration platform DICE, and automation discovery tool Presto as ways to turn fragmented automation into unified, human-centric operations. Wupperman and Durrani said they do not see major gaps in current BPS offerings for digital-native clients; instead, the focus is on picking the right domains and scaling verticalised, AI-native services from India to the world.

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)