US–Iran War: Motilal Oswal flags big changes in IT industry — Which jobs are at risk?

As tensions between the United States and Iran escalate, global markets are starting to feel the tremors. But the consequences may go beyond oil and geopolitics. According to a report by brokerage Motilal Oswal, the conflict, along with the rapid rise of artificial intelligence (AI), could reshape the future of the IT industry and the global tech workforce. For India’s IT sector - often described as the world’s digital back office - the impact may be twofold: geopolitical uncertainty affecting client spending and a structural shift in technology that could redefine how coding and software services are delivered. The brokerage notes that software engineering has become the “ground zero” of AI disruption, with a growing share of programming tasks now assisted or performed by AI systems.

War jitters trigger ‘narrative shock’ in IT stocks

Geopolitical tensions have already started influencing investor sentiment. According to the brokerage, the recent volatility in technology stocks reflects not only macroeconomic fears but also growing anxiety over AI-led disruption.

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The Nifty IT index has fallen around 15 per cent in the past month, a decline analysts attribute partly to what the report calls a “narrative shock”. This refers to the sudden shift in perception among investors that AI could begin replacing human roles sooner than expected.

Motilal Oswal estimates that 9–12 per cent of IT sector revenue could face disruption over the next four years if AI adoption accelerates across industries.

AI already influencing coding and customer service roles

One thing that really stands out in the report is how much AI has already changed the way people work. Anthropic’s data shows that jobs like coding and customer service are right at the center of this shift.

Take software development, for example. These days, AI tools help out with about 75% of programming tasks. They’re not just spitting out code - they review programs, catch bugs, and take care of a lot of the repetitive work that used to eat up so much time.

Customer service looks pretty different, too. AI now supports about 70% of what customer service reps do. Answering questions, processing requests, handling complaints - AI systems can step in for all of it.

Now, this doesn’t instantly mean people are losing their jobs. But it’s clear that the nature of digital work is changing fast. As AI picks up more of the routine stuff, people are moving towards roles that focus on bigger-picture problem-solving and designing the systems themselves.

Why software engineering is becoming ‘ground zero’?

The report points out that software engineering has become ground zero for AI adoption. About half of all API calls to AI platforms now have something to do with software development.

Developers and tech companies aren’t just dabbling - they’re weaving AI tools straight into their coding routines. These days, programmers aren’t slogging through every line by hand. Instead, they’re letting AI handle a lot of the heavy lifting: generating code, testing it, even tuning up performance. For older IT outsourcing firms, this new world isn’t simple. It throws up some real hurdles - but if they adapt, there’s a shot at even bigger opportunities.

Greenfield vs brownfield: Why AI adoption is uneven?

Motilal Oswal’s report highlights a crucial factor that could slow down widespread AI adoption in large enterprises: legacy technology systems.

New digital-first companies, often referred to as “greenfield” organisations, can integrate AI tools quickly because their systems are built on cloud-native architectures. In fact, about 90 per cent of the top 20 users of OpenAI’s AI platforms are new-age companies, according to the analysis cited in the report.

In contrast, established corporations operate in “brownfield” environments, where technology stacks have evolved over decades. These legacy systems are deeply integrated into business processes and regulatory frameworks, making AI deployment more complex. Until these systems are modernised, large-scale AI adoption across enterprises may remain gradual rather than immediate.

Budget pressures may intensify amid Middle East tensions

The ongoing geopolitical crisis in the Middle East could further complicate the outlook for IT companies. This could result in cuts to discretionary IT spending, affecting outsourcing demand in the near term. While geopolitical tensions may cause short-term volatility, Motilal Oswal believes the deeper structural shift comes from artificial intelligence itself.

The gap between what AI can theoretically do and what it is currently doing remains wide. For example, in computer and mathematics-related roles, AI could theoretically assist in up to 94 per cent of tasks, but real-world usage today covers only about one-third of them.