Why IT Stocks Are Pulling The Indices Down
The stock markets were once again unable to make up their mind on Thursday, searching for fresh queues and silver linings
On Episode 636 of The Core Report, financial journalist Govindraj Ethiraj talks to Ashvin is the Chief Strategy Officer for Consulting in Deloitte Asia Pacific as well as Sandip Agarwal, Fund manager at Sowilo Investment Managers LLP.
SHOW NOTES
(00:00) Stories of the Day
(05:12) Why IT stocks are pulling the indices down
(15:33) A top Sebi official says staggering derivative losses could have gone towards responsible investing and capital formation.
(17:50) India has sufficient options for oil imports if sanctions on Russia, Govt.
(18:43) US-India trade deal imminent, says Trump again.
(19:36) And on AI Appreciation Day, a look at where AgenticAI could change the way companies interact with customers.
NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on [email protected].
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Good morning. It's Friday, the 18th of July, and this is Govindraj Ethiraj broadcasting and streaming weekdays from Mumbai, India's financial capital. Before we start off, I'm going to be travelling for almost nine days next week onwards.
And therefore, I will either not be broadcasting or be intermittent, but we'll be back in full flow by the 1st of August.
Our top stories and themes today,
Why IT stocks are pulling the indices down and an insight into the industry,
US-India trade deal imminent, says Trump again,
India has sufficient options for oil imports if there are sanctions on Russia, according to the government.
A top Securities and Exchange Board of India official says staggering derivative losses could have gone towards responsible investing and capital formation.
And on Artificial Intelligence Appreciation Day, a look at where agentic AI could change the way companies interact with consumers.
The Markets Search For Cues
The stock markets were once again unable to make up their mind on Thursday, searching for fresh queues and silver linings.
And then there is the derivatives hangover with the Nifty 50's weekly futures and options expiry. The BSE Sensex fell 375 points to close at 82,259. The NSE Nifty 50 was down 100 points to close at 25,111.
In the broader markets, the Nifty mid cap and small cap were both down about 0.2 percent and 0.1 percent each. Foreign investor flows are positive right now, though it's not clear what that trend or how that trend could continue, but we will monitor it. Let's look at some sectors.
IT services companies results are now coming out. Wipro reported a roughly 11 percent year-on-year rise in net profits to about 3,330 crores for the quarter ended June 2025. That's Q1 FY26, up from about 3,000 crores for Q1 FY25.
Profits declined sequentially about 6.7 percent from the previous quarter. That's the fourth quarter of the last financial year. Revenue from operations for the latest quarter stood at about 22,134 crores, up slightly from 21,963 crores the year before.
On a sequential basis, however, revenue declined about 1.6 percent. Now, there is obviously much that's happening in the background and how and what kind of deals are getting signed by major U.S. corporations, which represent a bulk of revenue for Indian IT majors. Several import-dependent industries like retail and pharmaceuticals in the U.S. are not clear where tariffs will land, similarly with manufacturing as a whole, all of which is having an impact on their decision-making, but let's dive into that in much more detail very shortly.
On Wall Street, things were looking up on Thursday morning, and the reason why they were is important to remind ourselves of how markets are doing nowadays, if nothing else. Firstly, in the U.S., results have been strong. Companies ranging from Pepsi to United Airlines have delivered better-than-expected earnings, and quarterly earnings reports released this week have exceeded Wall Street expectations, according to CNBC.
It also said that among some 50 S&P components reported so far, 85 percent have exceeded analysts' expectations, according to FactSet data. Meanwhile, the economy is also looking strong. Despite all those tariff fears, the Department reported Thursday that jobless claims for the weekend of July 12th were lower at about 221,000 compared to the previous week, which was 228,000.
Separately, retail sales in June were also higher than expected, according to new data from the U.S. Census Bureau. So all of this might change, as many are predicting, but at this point, both on the corporate front and on the macroeconomy front in the United States, things are looking strong. Back home, the rupee weakened as it went past a key support level on Thursday to hit a three-week low.
It closed at Rs. 86.07 against the U.S. dollar, down from its close of Rs. 85.94 in the previous session.
The dollar index was itself stronger at about 98.7. Even as traders worldwide looked at the latest comments by U.S. President Trump about Federal Reserve Chair Jerome Powell's future, and linked to that, gold prices were down on Thursday. And just to go over what exactly happened, President Trump first suggested or seemed to suggest that he was going to fire Federal Reserve Chair Jerome Powell, something the markets don't like. And then he said that he did not plan to do so.
Spot gold was down 0.6% at $3,335 an ounce. And gold futures were down to about $3,331 per ounce. This is midday Thursday.
But we don't know about tomorrow. Because you have to understand or try to understand the bizarreness of this all. Because gold prices were up because of those reports on Wednesday that Trump was open to the idea of firing Powell, which pushed prices up by about 1.6%. And then later, of course, he said that he does not plan to sack him, but left the door open to the possibility, even as he renewed his criticism of the Federal Reserve Chief for not lowering interest rates.
And that's where the crux of the battle lies. Now, let's return to Indian IT services, whose fortunes also depend to a large extent on what is happening in the United States. So what are the key trends that are emerging from the results so far? And what is the outlook like for these larger, or for that matter, even smaller IT services companies? I spoke with Sandeep Agarwal, Partner Principal Officer and Fund Manager of Sovilo Investment Managers. And I began by asking him for his key takeaways from the results so far, before also asking him for his take on valuations and outlook.
INTERVIEW TRANSCRIPT
Sandip Agarwal: So, you know, the results are coming on expected lines. So, it was known that due to confusion on tariffs and some challenges in the US economy, it is not clear how tough the economy will be, whether it will be hard landing, soft landing, whatever. So, because of all this reason, it was known that the discretionary part of the Indian IP spend would take a backseat.
And just for the, to keep the context right, you know, the discretionary part is a smaller portion, but that is very important for both because that is what brings good. The repeat business is generally the steady state business, which gives you 90% of the business. So, that was known.
And I think if you see TCF missed on revenues, maintained margins somehow, HCL tech had a bigger miss on margins. So, you know, there are mixed results. So, TCF missed on revenues, maintained margins, HCL tech missed on margins, and the guidance of margin is also lower.
And Wipro we have seen is okay on all fronts. Techmingra was also more or less decent, but their deal was very strong. So, we are seeing some little mixed kind of reason, but let me tell you this, that, you know, this is now a mature industry.
So, expecting more than 6-7% growth in the large names is going to be challenging for two reasons. One, this agentic AI is really, really destroying the amount of effort required to do the work. So, basically, you know, you can't build the same number of efforts.
So, even if you are able to build the same efforts, or you're able to keep your revenue flat, it is a great task in my next three to five years. So, I don't see this industry going more than 5-6% over the next four or five years. And the large caps will be challenging to beat that number.
Govindraj Ethiraj: Right. I'll come back to the overall growth prospects. But if you look at, you know, some of the specific industries that these companies are dealing with, for example, retail, pharmaceuticals, manufacturing, many of these are linked to some kind of tariff issue or the other, because the supply chain, retail, of course, is dependent on imports.
So, there is uncertainty there. Are there industries, and I'm guessing it could include financial, which are less affected by the whole tariff uncertainty right now in the US and Europe, and to that extent, maybe our Indian companies are then more hedged?
Sandip Agarwal: Yeah, absolutely. So, if you see the results, we have seen more pain in retail and manufacturing, and you know the reasons. Retail has a lot of import driven, the supply chains are challenged and all because of the tariff war and all.
And manufacturing, similarly, there is no clarity. So, and the raw materials are also linked, the supply chains are linked. So, there is a challenge.
Right now, we are not seeing much challenge in the telecom and the BFSI, because they are more localised and not dependent on much on the global supply chain. So, that is a clear trend which is coming out. But let me tell you that, if there is a problem which happens, then banking is finally a derivative.
So, it reflects your GDP, right? It reflects your growth. So, it is a proxy to growth.
So, it will tickle down there as well. It will be very hard to defend even BFSI and telecom beyond this point.
Govindraj Ethiraj: Right. If I were to ask you the flip question, would you say that given all this, all the top IT services companies have done well?
Sandip Agarwal: Yeah, they have done well. I won't deny it, because you have to remember that the biggest market, which is the US, is already at 20% penetration level in outsourcing. The market shares, if you exclude the BPO part, we are at 96%, 97%.
So, what more can you achieve? They have done the best they can do and they are doing the best they can do. The only thing is that, you know, what is happening in this industry is that if you see post-COVID, there was a bunch of spend which came 12%, 13%, 15%, one year divided everyone.
But otherwise, this is a 6%, 7% growth industry only because there is so much only which can be outsourced now.
Govindraj Ethiraj: Right. And, you know, one of the things that maybe triggered the growth concerns for the industry, which is to come back to the larger growth question, is the Accenture results which came last month. And that seemed to suggest for the first time that, you know, deals were not likely to go the way people thought they would.
What are the signals that you see or look for when you assess how the near-term future looks like?
Sandip Agarwal: So, you are spot on. So, Accenture results, you know, they were clear. The first time it happened , the outsourcing order book was low.
The growth was lower. There was a deceleration. There was no conviction in the CEO's commentary also.
I think after almost 25-26 quarters, which is like 6-7 years, I have seen that, you know, the outsourcing book has seen challenges. And that was a clear signal that bad numbers for us wouldn't be good. I think, you know, going forward also, I believe that the way efforts are being killed by the new technology, it will be hard to grow.
And even a 5-6% growth will be a very good growth. To be honest, see, Accenture's growth is large, and it has a very huge Inorganic company also. But despite that, the numbers are very poor if you compare.
So, we are doing phenomenally better than them. But the question is that, you know, no one is bound to be invested in a particular sector. So, if you don't get growth, you have a choice to flip.
So, I think it is the new FMCG. The good part when I speak to a lot of investors here is that they are saying that if we are paying 50 multiples for FMCG, which is going to grow at 4-5%, better to pay 25 times for IT, it will also grow at 5-6%. So, that trade definitely is there.
Govindraj Ethiraj: Which I guess brings us to the next logical question. So, how would you then look at valuations in IT stocks?
Sandip Agarwal: There are two ways to look at it. One, I think this is a mature industry, 5-6% revenue growth is going to happen for the large names in the next 4-5 years. You exclude ER&D companies like KPIT, Tata, LXE, LTTS and all that are persistent because ER&D as an industry is going at double the rate of IT services.
So, these companies will do better. And then there are some companies which are very small and because they are very small and they have quickly, you know, moved into AI and others, they are going to grow even better. The problem is that everyone knows everything.
So, the challenge is that people are assigning 25 times to the companies which are growing at 6-7%, 40 times to the ones which are growing at 12-13% and 50-60 times to those which can grow at 20%. So, the pay graduations are very, very stressful. And I think, you know, these pay graduations can only be justified if you are shifting from some other expensive sector, which is FMCG in my view, to this sector.
Then you can definitely say, okay, I brought down my average pay ratio by shifting from FMCG to the IT sector. I think that rate definitely is there. Other than that, I honestly as a fund manager won't pay 25 multiple or 4-5 pay ratio for a mature industry.
It will be very tough for me to do.
Govindraj Ethiraj: Right. And you refer to AR&D, the smaller companies. Can you define that?
Sandip Agarwal: So, AR&D is an engineering, research and development company. So, the way we saw IT services outsourcing, the same kind of outsourcing is now happening in the non-software services side. So, basically, mechanical engineering, electronic engineering, all those spaces.
So, the companies which are specialised in the automotive sector like KPITs, the Tata Elixirs, the LTTS, off-highway equipment, the aerospace, all these industries, there the growth is much better. The industry growth itself is 2-2.5 times of the IT services. So, that industry will grow at, let's say, 12, 13, 14%.
And these companies which we are talking about can grow even 2-3% higher than that. But the problem is that now they are also 40 times more expensive. So, for 14% growth with 40 multiples, the second challenge we should remember is that we have been a big beneficiary of rupee depreciation every year.
Now, we don't know whether that will happen because food is in a structural downturn. If your margins are not held by currency and you have a natural wage, high pressure every year, which takes away 80-90 basis points. So, we are seeing 6-7% growth and 80-90 basis point margin decline.
Then we are basically coming to a 2-3% EPS growth kind of situation for the large names, maybe 7-8-10% for the mid-size and 15% for the smaller ones. And if you now place the peg ratios, they are astronomically high. So, that is my key worry in this.
Govindraj Ethiraj: So, engineering R&D is something that the large companies also do, whether it's TCS or HCL or Wipro. Yet, you're saying that because these companies, the other ones you mentioned like KPIT and Persistent are smaller and focused, enjoy higher multiples and valuations.
Sandip Agarwal: Absolutely, you're right. So, HCL has a very big R&D and product engineering business, more than a billion dollars. The challenge is that in the overall scheme of things, it is still like 12-13-15% for each one of them.
Now, compared to KPIT, LTTS, and Catalytics, they will have 70-80%. So, 70-80% going at 15-20% is a different overall growth number and 12-15% going at 20% is a different growth number. So, that is the key reason why the growth rates, as I said, will be 5-6-7% for the large, the mid will be 10-8-10-12 and the small will be 15-20%.
So, that is the reason it is derived. It is mathematics.
Govindraj Ethiraj: Therefore, should we be recategorising because Information Technology Services is not the same as Engineering, Research and Development. We seem to be looking at them in the same bucket.
Sandip Agarwal: Yes, because see, earlier the proportion of ER&D and BPO was very, very small. So, everything was clubbed together. NASSCOM also used to give together.
But now, it is very clear ER&D is a different business, BPO is a different business and IT services is a different business.
Govindraj Ethiraj: Right. Last question, we finished one quarter this year. How are you seeing IT services in specific and overall growth in technology-linked businesses in the next quarter or two?
Sandip Agarwal: So, see, we predominantly are a first-half driven industry in India because, you know, the third quarter is a furlough quarter, December quarter because of the holidays, the manufacturing furloughs are very high. So, you can't go beyond. Even if the environment improves, you can't post strong revenue growth because 3-4 days are lost in holidays.
And then you are followed by the fourth quarter when, you know, February has less number of working days. So, we are a first-half dependent industry. And the first half, I think, is also, whatever these companies do, the best number will be the second quarter.
And I don't see the second quarter to be great because the communities are very, very, very, very cautious right now. So, I think FY26 is a washout. If something happens, it will happen in the first half of FY27.
Govindraj Ethiraj: Got it. Sandeep, thank you so much for joining me.
Sandip Agarwal: Thank you. Thank you so much.
The Perils Of Short Term Derivatives
Short term derivatives are dominating the domestic equity derivatives landscape, which could have adverse consequences, according to Anant Narayanji, the whole time member and a senior Securities and Exchange Board of India official who spoke on Thursday.
He said that unlike longer term derivatives, short term derivative products such as expiry day trading and index options may detract from capital formation, he said at a CII conclave in a report quoted by Business Standard. He said that we recognise the potential concerns of market infrastructure institutions, brokers and other intermediaries whose revenues may depend heavily on these short term derivative volumes. But we must ask ourselves collectively, is all this at all sustainable? He also added that the turnover in index options is often 350 times or more than the turnover in the underlying cash market, creating an imbalance.
A SEBI study, as we've been quoting frequently here on the core report, has pointed out that nine out of 10 individual traders in the F&O segment last year lost money and those losses crossed 100,000 crore rupees or 1 trillion rupees. Narayan also said that these staggering retail losses were a large sum of money that could have otherwise gone towards responsible investing and capital formation and added that the current structure is not sustainable for any stakeholder. And this is something that other institutional brokers are also now saying publicly, including Kotex Securities, who we spoke to just a day ago.
Narayan of SEBI said that while derivatives were vital for price discovery, hedging and market depth, certain trends in the ecosystem have warranted a closer look by SEBI. The larger problem in some ways, if you want to call it that, has been triggered by high frequency trading firms who are also called algo traders, and most of them are powered by a combination of very high powered machines and very smart traders, but mostly sitting on Wall Street and typically sitting on the other side of fairly dullable retail investors right here.
India Can Manage Russian Sanctions
India is confident of meeting its oil needs from alternative sources if Russian supplies are hit by secondary sanctions. Reuters quoted India's oil minister, Hardeep Singh Puri, saying on Thursday, President Donald Trump had warned that countries purchasing Russian exports could face sanctions if Moscow fails to reach a peace agreement with Ukraine within 50 days. India should be able to deal with any problems with Russian imports by seeking supplies from other countries, the minister said, adding that India has diversified the sources of supply and we've gone, I think, from about 27 countries we used to buy to about 40 countries now.
He also said there were new supplies coming into the market like Guyana and existing producers from Brazil and Canada. India is also increasing exploration and production activities. He said that I'm not worried at all.
If something happens, we'll deal with it.
India-US Trade Deal
Speaking of deals, the United States is very close to a trade deal with India, while an agreement could possibly be reached with Europe as well, but it's too early to see whether a deal could be reached with Canada, according to President Donald Trump, in an interview aired on Real America's Voice on Wednesday, reported by Reuters. He also said, or suggested, that a majority of countries, which is about 150, could see tariffs between 10-15% on their exports into the USA.
Now, while those might be the majority of countries, those don't necessarily represent the bulk of trade imports. We're very close to India and could possibly make a deal with the EU, Trump said when asked which trade deals were on the horizon. An Indian trade delegation arrived in Washington on Monday for fresh talks and asked about the prospects of a deal with Canada, which like the EU is reading countermeasures if talks with the US fail to produce a deal, Trump said too soon to say.
There is no word from India officially as yet, which is somewhat expected.
AI Appreciation Day
July 16th or the day before was AI Appreciation Day. AI is artificial intelligence.
It celebrates the transformative power of AI in shaping our world. Honoured researchers, engineers and visionaries who advance AI technologies. And also, this is a time to reflect on ethical AI development, which would ensure inclusivity and fairness, which makes it a good time to walk through the quick transition we've seen in India in AI starting in 2023 with Gen AI and on to agentic AI, almost a buzzword now.
But agentic AI is also what you see in your interactions as a customer with many consumer facing organisations. In 2025, 25 percent of enterprises that use Gen AI will likely launch agentic AI pilots or proof of concept, growing to 50 percent in 2027, according to a report by consulting firm Deloitte. I spoke with Ashwin Velody, partner and chief strategy and innovation officer consulting at Deloitte Asia Pacific based out of Bangalore, and I began by asking him what AI Appreciation Day was all about, including the concerns on the journey so far.
INTERVIEW TRANSCRIPT
Ashvin Vellody: First off, I think, as you said, this AI Appreciation Day, it kind of puts in context how technologies, once they are embraced by consumers and then by professionals and enterprises, can have long-lasting impacts. So this is one such technology that I see a lot of potential here. And I think the fun is ahead of us.
A lot of the possibilities are ahead of us as we explore this AI journey. And you brought up both points. One is the positive aspects of how this is possible.
The other one, rightly so, Govind, is we must run this responsibly, this set of technology, AI, gen AI, agentic AI, we must run it responsibly and we must run it with all the right transparency, governance, ethics, privacy in it. So those are the two aspects.
Govindraj Ethiraj: Right. And if I were to now ask you about the application as you're seeing it today at the enterprise level, I know that AI and its successive technologies, which is agentic AI, which we're going to dwell upon, is now covering a wide swath of verticals in companies. It could be R&D, manufacturing, sales, supply chain, distribution, retail, and so on.
So where are you seeing it have the maximum impact at this point or the maximum relevance at this point? And in what kind of industries, if there is such a distinction? So I'll do two things.
Ashvin Vellody: I think, see, if you paint it with a very broad brush, AI, you know, that is now fairly pervasive in all organisations. If you step back and go four years back to today, the use of machine learning, machine learning ops, artificial intelligence tools on search, summarise, models, simulation, all of that is quite prevalent. So what I'll do is that actually, from my perspective, it's quite widespread.
AI, it is across industries and it is used for quite a few things. You know, one is for analysis, insights, recommendations, and asking. Then the next evolution, if I take a segue, is Gen AI, which is about generating new content, generating new points of view, all of that part of the things.
That also is reasonably well entrenched in typical use cases. I'll give an example of Gen AI in marketing and branding, for example. An oft-repeated challenge is, look, I got a certain mandate from a client.
I have to run this agency copy across multiple mediums and formats. I have this brief, but I need to now tailor it to 10 different scenarios with 50 different SKUs in a quick turnaround time of, let's say, two weeks. Now, earlier, automation was there.
It was doing all this good stuff. But today, what's happened with Gen AI is that ability to create replicable content, similar content with slight variations, giving the client, in this case, the brand company, endless choices on what's possible. So that is one way Gen AI has added value.
Now you fast track it a little bit towards here and now, which is agentic AI, which is one more step ahead of this technology. And there, what I see goes in this, all key areas, customer service, fraud detection, supply chain management, inventory management, and taking action. The only big difference that has moved, which is quite substantial in my view, is that agentic will help you not only create content, think through stuff, but also take action.
This is a big distinction in how the technology has leapfrogged from Gen AI to agentic AI.
Govindraj Ethiraj: And what's the use case that comes to mind first when you talk about this level of intervention or response by an agentic AI setup?
Ashvin Vellody: So I'll give you a couple of examples. Okay, let's say you and I buy things online and something has happened in customer service. You write an email, look, I was to this, whatever this marketplace that you bought this from.
You say, look, this delivery was expected today and I am not seeing anything. What do I do as a customer? So this is one use case for customer service.
So easily now today, earlier the follow-ups, the triage, the mechanism to resolve, all that would be done by a mix of automation and humans. What agentic AI is already doing in this use case, it's able to handle the query. It's able to understand human language.
It's able to realise that, look, the shipping routes have got delayed, figure out alternate shipping routes, book that shipping, get it to the customer, and without anyone instructing, offer a discount as a promo for the next purchase. And then send an NPS survey to the customer saying, are you happy at the end of the day? Look at the power of that.
So the possibilities of this will be twofold in my view. This is one such. You have similar things in supply chain management on how supplies can be or the inventory management, production planning, scheduling, all can be managed.
You have things in financial fraud detection. We see clients across every sector, financial services are really embracing it. IT, ITS, the service industry, you have got things in manufacturing that people are exploring these ideas.
On the agentic side, I'm narrowing it down to agentic. So that's what I see and use cases abound. And it's early days, but the best is yet to come on the agentic field.
Govindraj Ethiraj: Right. And you've argued in this paper that you put out that as you scale up, you also have to be ready as an organisation, assuming you're already at an agentic AI level and you're still not at a gen AI level, which many organisations would be passing through, which means more exposure. You've talked about APIs and connectivity and things like that.
So what is the necessity, the positive and the challenge?
Ashvin Vellody: So I'll just flip that a little bit. I think gen AI precedes agentic AI. So just after contextualising that, right, I think, see what will happen going in my view is that, see, all of these technologies is like a speed motorbike.
You know, you can ride it, you can get extreme thrill out of it, but it has to have guardrails. So the guardrails in this case, to my mind, are quite simple. Okay.
You have to have a few things enterprises must have. They must already have connected systems. They must have proper governance, which folks like us at Deloitte excel at proper governance of managing how an AI or an agentic AI agents will interact seamlessly with humans in the middle of the process.
And third, they must have proper responsible AI and I'll break it down. Responsible AI is transparent. What it means is there is explainability of what that agent did.
So you and I are able to look at it, see that, look, you know what, what is thinking, what is called the reasoning process is able to reason like you and I reason and a human should be able to read it and say, oh, you know, I agree with that. So that's explainability. Then there is a concept of observability.
You must be able to observe what happened. And last two pillars are basic privacy so that the right information goes to the right person or the right companies between two companies, let's say, and the incorrect information doesn't go. And the last point is what is called model hallucination.
So you want to be very clear by using proper tools and techniques and calling in the experts, in my view, to manage model hallucination. Okay. So that it doesn't reflect biases that may have unconsciously corrupted.
So that's how you balance the pros, which is a lot of the art of possible and amazing possibilities with the cons, which is these things that, you know, may create a cascading effect, which may downplay or put a dampener into all the possibilities.
Govindraj Ethiraj: Right. And last couple of questions. So one is the same example that you used about package getting rerouted and a lot of agentic AI, as I can see from what you're saying, is customer facing, at least at this stage.
What happens when something goes wrong? I mean, will the system ever find out or at what stage does it find out and what happens after that?
Ashvin Vellody: That's a great point. What we recommend as Deloitte, and that's generally considered as best practice, is all these processes. See, these are all multi-step processes.
The use case I painted to you. There has to be what we call a human in the middle. We don't recommend any process to be fully done by agents with no care in the world.
That's not the recommendation. The approach is you have what is called basic maker-checker philosophies. You have the process done, let's say, by agents, but you have a human to check and validate.
Then there is a concept of when something goes wrong. There are enough checks and balances in two ways. One is the governance principles that I called out.
The other is the automation itself to call out, look, there has been a problem in this thing. And it has the ability to flag. It has the ability to call out an exception.
The humans will get into that step and take the right action to mitigate or to clear or to self-heal, whatever the options. So it's never, we strongly suggest not to run this completely like an autonomous vehicle. It's going to be human in the middle with the ability to, as they say in some football analogy, call an audible and say, look, you know what, we've got to step in.
Govindraj Ethiraj: Got it. And I assume that being allows you to do many more transactions than you would have otherwise done. Last question.
So we are in 2025. So by the next AI experience day, what is the one thing that could have changed for the better? And maybe one thing which I may not have.
Ashvin Vellody: What my hope is that, especially in India, we use agentic AI or AI and its knowledge tool set for unlocking the tremendous possibilities that India is faced with. It's already got a UPI stack. It's got data.
It's got a government programme that embraces AI. How best we can leverage to make the most out of the citizen services that folks are being offered and what's the best value it can do both for that and also for enterprises to give better results to go perform better. So that's something, and I'm pretty confident that that will happen.
You have, as they say, all the makings of a perfect star. So hopefully that thing really comes through. It's very, very clear to me that critical thinking, the ability for humans like all of us on the call, is much more valuable today than it was ever before.
You have to have the ability to creatively think, to critically think, analyse and solve problems. Only then these tools at the hands of creative and critical thinkers will unleash its power. So we can't outsource that part to anyone.
So I hope that doesn't become the norm that, look, hey, you know, I don't want to think. I'm just going to use this thing. It's not that.
It's a tool. It's an enabler. It's not the other way around.
So that's something we have to keep being alert for.
Govindraj Ethiraj: That's a good note to end on, Ashvin. Thank you so much for joining me.
Ashvin Vellody: Thank you. Thank you, Govind.
