TCS Embarks on AI-Driven Transformation of Indian IT Services Landscape

Tata Consultancy Services Pushes Back Against Claims of IT Services Industry Obsolescence by 2030

Tata Consultancy Services (TCS) has refuted claims that the IT services industry could become obsolete by 2030, with Chief Executive Officer K Krithivasan stating that enterprises will continue to rely on firms like TCS to extract value from artificial intelligence.

According to an interview with Economic Times, Krithivasan emphasized that Indian IT services have proven to be resilient over the years, with its strength lying in its "depth of skill sets" rather than cost arbitrage. His comments come in response to recent assertions that advances in AI could reduce the need for traditional IT services. Instead, Krithivasan believes that enterprises will require support in deploying and scaling AI-led transformation, creating continued demand for service providers.

Krithivasan's views are echoed by Chief Operating Officer Aarthi Subramanian, who noted that there remains a gap between the pace of AI innovation and enterprise adoption. This gap presents an opportunity for IT services firms to assist clients in integrating new technologies into existing systems. Subramanian also highlighted the potential of advanced AI systems, including Claude Cowork and Claude Mythos, which are being viewed internally as opportunities rather than threats.

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Comparison of Revenue Growth in IT Services Sector

The company's outlook comes after TCS reported a 2.4 percent decline in annual revenue, its first since listing in 2004, amid a broader slowdown in global technology spending. However, Krithivasan said the revenue decline was linked to the conclusion of a large transformation programme in the first quarter, and that the company recorded growth in the subsequent three quarters.

Deal Pipeline and Demand Trends

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TCS reported its highest-ever total contract value (TCV), with $40.7 billion in FY26 and $12 billion in the March quarter, according to Economic Times. Krithivasan attributed the strong deal pipeline to increasing client confidence in investing in their projects, with decision-making cycles improving.

The company also noted that it has not seen delays in deal closures despite geopolitical tensions, including the West Asia conflict. Some large deals were signed in the past month, indicating continued client appetite for AI-led transformation projects.

Shift in Deal Structures and AI-Led Productivity

TCS is seeing a shift towards bundled, large-scale transformation deals that combine multiple services. Subramanian said AI is increasingly central to both operational efficiency and transformation work. The company said annualised AI-related revenue has crossed $2.3 billion, with growing adoption of AI in IT operations and standalone transformation deals.

Productivity improvements from coding assistants have increased to 15-30%, up from 10-15% earlier, according to Subramanian. Krithivasan said productivity gains from AI could lead to "deflation" in some existing contracts, but added that this is a normal part of the business cycle and is offset by new project opportunities.

Hiring, Restructuring, and Acquisitions

TCS said its workforce restructuring cycle has concluded. The company hired around 44,000 trainees in FY26 and has issued 25,000 offers for the next hiring cycle, though it has not provided guidance for FY27 hiring, according to Economic Times. The company's total employee count stood at 584,519 at the end of the quarter, down 23,460 from a year earlier.

Krithivasan also said the company is open to acquisitions aimed at building capabilities, citing recent deals including the acquisition of Coastal Cloud for $700 million and ListEngage for $73 million.