Outlook 2025: Agentic AI, small language models among top IT trends seen in new year

Leaders at large Indian IT services companies, over the past 6-8 quarters, have been talking about their clients squeezing discretionary spends, though in the first half of this fiscal year (FY25) there has been some optimism as  such spends are seeing a gradual return in the BFSI sector. A recent report by rating agency ICRA on hiring trends in the Indian IT services industry expects hiring to materially pick up only by the end of H1 FY2026, but with GenAI making inroads and companies upskilling their employees with AI tech skills, the report expects overall moderation in fresh hiring, as compared to pre-Covid levels. While Q3 is generally perceived as a muted quarter given the furloughs and holiday, the January-March quarter is likely to give companies a better sense of where discretionary spends will be headed in the coming year (FY26) as clients start deciding where to spend.

Large IT companies are betting on a few tech trends in 2025 that they see bringing in deals and transforming the way they work. Mohammed Rafee Tarafdar, CTO, Infosys, sees tangible benefits being derived with the use of artificial intelligence in business further maturing in 2025. With the evolution of Agentic AI-led business processing, AI-driven cloud and data transformation, "We are seeing increased investments in scaling inferencing which improves the reasoning capabilities, thereby enabling the agentic systems to be used to eliminate tasks and re-engineer the processes,” he says. Also, while the buzz has been around large language models (LLMs), Infosys sees small and medium language models driving better results. ”As the small language models become more specialised and can deliver higher accuracy at lower cost, the adoption of these models in enterprises is likely to accelerate” he adds.

Noida-headquartered HCLTech is also betting on AI and Gen AI technologies to dominate the year and likely realise its full potential. Vijay Guntur, chief technology officer and head of Ecosystems at HCLTech sees the use of AI in faster creation of products and services. Agentic AI is helping in further cost optimisation. While for companies effectively managing the risks associated with AI at scale will become important and cybersecurity, governance, and responsible AI are taking centre stage, Guntur says, “Early adopters in healthcare, financial services, and technology sectors are expected to further deepen their AI integration, leveraging it to speed up time-to-market, generate new revenue streams, improve customer and employee experiences, and gain competitive advantages.”

Apart from AI-led transformation in the ways of doing business, Wipro sees democratisation of data with data marketplaces growing across industries and unlocking newer revenue streams. Acceleration in Blockchain adoption is also helping in the digital commerce infrastructure. “While financial institutions lead the way, almost all industries will enjoy the benefits of traceability, increased security, inbuilt trust, and transparency among members,” a Wipro executive says.  Also, with sustainability becoming an important business parameter, the company also expects the use of AI and non-AI systems to optimise resource usage, reduce waste, and improve energy efficiency.