'IT slowdown cyclical; to recover over medium term'

Summary: Despite one of the longest downturns in recent memory, SBI Mutual Fund’s Vivek Gedda believes the Indian IT sector is in a cyclical slowdown, not a structural decline. He explains what could trigger a recovery, how AI may reshape growth drivers and why select mid-cap and global tech players offer better long-term risk-reward, in this interview. The Indian IT sector is navigating one of its longest slowdowns in recent memory, shaped by a post-pandemic moderation in tech spending, global macro uncertainty and hesitation around how Gen AI will reshape enterprise technology budgets. Despite this, Vivek Gedda, Fund Manager at SBI Mutual Fund, believes the slowdown remains cyclical rather than structural and expects the sector to recover over the medium term, with emerging technologies eventually supporting downstream revenue growth. Gedda manages the SBI Technology Opportunities Fund and the SBI Innovative Opportunities Fund with a combined asset base of Rs 11,207 crore. He joined SBI Mutual Fund in February 2022 and brings over 14 years of experience in financial services. An engineer by training, Gedda holds a B.Tech from IIT Madras, an MBA in Technology Management and a master's in science from the Hamburg University of Technology. In this interview, Gedda explains how he reads early signals of a turnaround, identifies long-term growth verticals, assesses mid-cap potential, evaluates AI-driven change and flags the hidden risks facing Indian IT. What makes the current slowdown in tech spending fundamentally different from earlier downcycles, and what would convince you that this is not merely a cyclical pause but something more structural? If you look at the cycle, this has been the longest down cycle for Indian IT, at least compared to previous cycles, and that itself is very different. But I think this cycle has been unique for multiple reasons. Firstly, it is coming off a very strong base of tech spending post-Covid, so maybe there was just a pause, a moderation and a mean reversion in the same. But when that was starting to play out, I think we were hit with macro uncertainties on one side, and there was also this broader uncertainty driven by Gen AI. Normally, technology cycles help you navigate technology spending. However, this time I think the shift was so significant that