IT Inc starts to worry if AI will hit reputation, profit

Cognizant, Capgemini, Accenture point to risks; domestic IT firms may follow

Bias, errors and hallucinations—the technological marvel that is Generative AI has seen it all, while writing code, composing music, and conjuring up images. Meanwhile, at some of the world’s largest technology services firms, new concerns are rising: risks to profit, reputation harm, and legal liability.

For the first time since the launch of ChatGPT took the world by storm, the world’s largest IT services firms, led by Accenture Plc., Cognizant Technology Solutions Corp. and Capgemini SE have flagged the rise of AI and GenAI tools as a risk factor in their annual reports.

Tagging AI and Gen AI as potential risks signals the rising role of these disruptive technologies at technology leaders. This may also prompt homegrown IT firms like Tata Consultancy Services Ltd, Infosys Ltd and HCL Technologies Ltd to flag similar risks, at least two industry executives said on condition of anonymity. These companies, which follow the April to March financial year, issue their annual reports in the coming months.

Nasdaq-listed Cognizant, which follows a January-December financial year, cited potential risks associated with the rise of AI in its annual report released in February.

“Our use of AI Technologies may not be successful and may present business, financial, legal and reputational risks,” said Cognizant.

“We increasingly use AI-based technologies, including GenAI, in our client offerings and our own internal operations. As with many innovations, AI presents risks and challenges that could adversely impact our business,” the company said.

After OpenAI released ChatGPT in 2022, Meta, Google and Microsoft have followed with similar tools. Meanwhile, Apple is in talks to build Google’s Gemini AI engine into the iPhone.

“The development, adoption, and use of AI technologies are still in their early stages and ineffective or inadequate AI development or deployment practices by us, our clients, or third parties with whom we do business could result in unintended consequences. We plan to incur significant development and operational costs to build and support our AI capabilities to meet the needs of our clients,” said Cognizant.

“Failure to appropriately conform to this evolving landscape may result in legal liability, regulatory action, or brand and reputational harm,” said Cognizant, which saw its revenue slip 0.4% to $19.35 billion in the year ended