“Indian IT companies need to take a very close look at themselves and ask — what are we doing today that could become obsolete in a few years because of AI?” van der Linde told ET Now.
AI could reshape India’s IT industry, not replace it
While AI automation poses short-term risks, van der Linde believes it also offers a huge opportunity if companies adapt.
“AI is a serious threat, but also a growth enabler. The key will be redeploying people and integrating AI to expand capabilities rather than replace them,” he said.
He added that after 25 years of moving up the value chain, from Y2K fixes to global process outsourcing, Indian IT must now evolve again — this time through AI-powered transformation.
Although van der Linde is “not overly excited” about IT in the near term, he said the sector will remain “okayish” and could see a modest recovery as growth and the rupee stabilize in 2025.
Financials and formal retail to drive India’s next growth cycle
Looking beyond IT, van der Linde sees banks, financial services, and formal retail as the key pillars of India’s next growth wave.“Formalization of retail has been underway for 25 years, but there’s still a long way to go,” he said, adding that smaller innovative financial firms offering insurance or fintech solutions could emerge as new leaders.
He also expects improving asset quality and lower provisioning to enhance bank profitability in 2025–26 as credit growth revives.
Be careful with valuations: HSBC strategist warns on new-age tech stocks
When asked about the soaring valuations of new-age companies like Zomato, Swiggy, and Lenskart, van der Linde urged investors to stay cautious.
“Whenever markets move away from fundamentals — profitability, cash flows — there’s always a reset,” he warned.
“We’ve seen this in China, Southeast Asia, and during the dotcom bubble. If liquidity dries up, even fast-growing firms can collapse overnight.”
He advised long-term investors to focus on sustainable cash flows and profitability rather than chasing short-term momentum in startups valued only on sales multiples.
The India story: Diverse, dynamic, and still evolving
Van der Linde highlighted India’s diverse market ecosystem, which allows multiple growth themes — from infrastructure and renewable energy to consumption and fintech — to coexist.
“The great thing about India is that all these themes can play a role. It’s a market of many growth stories, not just one,” he said.
He remains optimistic that as the economy matures, India will continue to attract global capital — especially as investors rotate out of AI-heavy North Asian markets in search of broader, non-tech growth stories.