Speaking to ET Now, Chowdhry explained that the move should be seen in context rather than in isolation. “In the current situation, it makes sense. The sole purpose is to reduce shares and boost EPS down the road. Investors may be disappointed, but given tariffs, AI, and reinvention, Infosys has done the right thing.”
Peers likely to follow
The Infosys announcement has already stirred speculation on whether other IT majors will adopt the same strategy. According to Chowdhry, buybacks may soon become a sector-wide phenomenon. “Almost every major Indian IT company will need to do a buyback. They are all in a standby mode. Given the cash position and backdrop, buyback is the right strategy. But a 15–20% stock jump near term? I doubt it.”He suggested that while the move makes sense structurally, investors should temper expectations of immediate sharp gains.
Limited impact on liquidity
Concerns that buybacks could sap liquidity from the secondary market were brushed aside by Chowdhry. “A 2–3% liquidity impact is minor. EPS improves with fewer shares, and if multiples hold, the stock rises.”In his view, the financial engineering effect of a buyback—boosting per-share earnings—matters more than short-term shifts in trading volumes.
AI as a double-edged sword
The conversation also turned to artificial intelligence, which has become both a growth driver and a stumbling block for IT services firms. Chowdhry warned that Indian players must tread carefully. “IT firms can’t overcharge for AI projects. Clients expect efficiency, not inflated costs. Indian companies are better off staying quiet and learning from others.”
He pointed out that Accenture has already faced backlash in the U.S. for charging too high a premium for AI-related services. Indian IT companies, he argued, should avoid making the same mistake.
Staying under the radar
Chowdhry cautioned that aggressive performance by Indian firms could backfire in overseas markets, particularly the U.S., which remains their biggest client base. “If Infosys posts big beats, U.S. regulators will notice. Staying under the radar is the smarter long-term approach.”
In his view, visibility comes with risks in today’s geopolitical climate. Understatement, rather than overstatement, may be the key to survival.
Weak earnings narrative
Despite Infosys raising its FY26 guidance, Chowdhry believes the broader sector still lacks a convincing story. “The narrative is weak. You can’t run on slogans. Right now, most IT services companies are a disappointment.”
He was critical of efforts like Infosys’ “Topaz” platform, calling it too vague. What investors and clients need, he stressed, is clarity and detailed roadmaps—not marketing buzzwords.
The IBM contrast
Chowdhry singled out IBM as an example of how IT firms can position themselves effectively in AI. “IBM offers a full-stack solution in AI with partners like Google and Microsoft. Indian firms are still stuck in point solutions.”
IBM, he explained, has combined its software portfolio, AI models, and ecosystem of global partnerships to deliver a holistic offering. By contrast, Indian companies remain fragmented in their approach, focusing more on narrow digital projects rather than integrated AI strategies.
Falling behind innovation
AI innovation, he noted, is evolving faster than ever, with new paradigms emerging every few months. “During Y2K, Infosys thrived by removing confusion. That opportunity exists again, but moving too fast risks U.S. scrutiny. For now, buybacks and caution make sense.”
Chowdhry warned that Indian IT firms risk being left behind if they do not adapt, yet they must also avoid attracting too much attention in sensitive markets. This balancing act, he said, defines the industry’s current challenge.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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