Gandharva

Everyone is shorting SaaS. Everyone is shorting IT consulting companies. Everyone’s seen what’s happened to Salesforce, Atlassian, & Infosys. The trade is crowded, the multiples have already compressed, and the alpha is gone. But.. what if.. I told you there was still a bigger better play. One where a $3.7T economy is structurally short the labor arbitrage that frontier AI models are dismantling, and that the macro plumbing amplifies the shock instead of absorbing it… I love my girlfriend.. but guys.. it’s time to short the Indian rupee. India runs a structural current account deficit which means they spend more on goods/services from the rest of the world than they earn selling their own. They’ve run one every year since the economy liberalized in 1991. Running a current account deficit isn’t fatal, but it’s like a treadmill, you have to keep finding dollars to fund it, year after year, and if any one of the funding sources dries up, the currency adjusts. India has been running on this treadmill for thirty years. The reason India has been able to pull this off is because their deficit is funded by remittances from the Indian diaspora, FDI/portfolio flows, and critically for this trade services exports. Services exports from India are now ~$370B annually and growing, and they have become the single largest plug for India’s external accounts. Goods exports are ~$440B but with imports of ~$680B, the goods trade deficit alone runs ~$240B. Services exports cover that gap and then some, which is why the INR has been remarkably stable around 83–88 per USD for years despite the goods deficit. The composition of these services exports is why this is an AI trade. Roughly 55% of India’s services exports are IT service, software services, and back-office functions that the giant Indian consulting companies sell to US and European enterprises. That’s ~$200B+ annually. If you then add in Global Capability Centers (which are when international companies create an Indian office to offshore work. This is estimated to employ 1.9M people and is growing at 11% YoY), you’re looking at the entire IT services economy producing somewhere between $240–280B of annual export earnings, all of which is dollar-denominated, all of it billed by the hour. This whole sector alone sustains India’s current account deficit and is in the direct line of fire to be automated by AI productivity gains. This is not a 5% problem. This is a 30–60% revenue compression over five years. Roughly half of the $280B base is routine software work like app development, maintenance, and testing that is already replaceable by GenAI coding tools. Another ~25% is call centers, claims processing, document review and that’s even more exposed because the work is more structured and the AI tools there are more mature, putting another ~$38B at risk of a 50% compression. The remaining ~25% is higher-value enterprise work that’s defensible for now but maybe ~$7B is at risk. If you Stack them all you get ~$80B of annualized revenue compression by year five, or 29% of the base gone and that’s the floor for my estimate.. The bear case destroys $140–170B of service exports or 50–60% of the entire industry. The timeline matters here a lot as well. 2027–2029 the Fortune 500 companies will have a good idea of token usage and capacity rationalization leading to vendors shrinking and multi-year contracts repriced lower. Sadly, this exactly when India needs the funding most, because manufacturing PLI revenue won’t have ramped enough to compensate. A 29% revenue compression means India’s IT services exports shrink from ~$280B to ~$200B annually with $80B of dollar earnings gone. The current account deficit today at -1% of GDP is ~$40B today. Meaning you don’t need my bear case to break the rupee just losing $80B of services revenue alone takes the deficit to roughly -3% of GDP, which is historically the level where INR has been forced to depreciate sharply.