TCS, Infosys redraw AI strategy: Artificial intelligence is reshaping the foundations of India’s information technology industry. For decades, the sector prospered on a model of low-cost, high-volume manpower. That advantage is fast eroding as algorithms take over routine work, from coding to customer service. The country’s premier tech firms are now racing to embed AI into their operations—not only to improve efficiency but also to remain competitive in a shrinking global market.
Tata Consultancy Services (TCS), the nation’s largest IT services firm, has set up a dedicated artificial intelligence and services transformation unit, effective September 1. The new division, headed by veteran executive Amit Kapur, will consolidate the company’s AI initiatives into a single platform. This follows the creation of an AI and data unit earlier this year, and comes just weeks after TCS announced that it would lay off 2% of its global workforce of 613,000 in a push to become more agile. The restructuring underscores how central AI has become to the company’s growth strategy.
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Pressure on IT industry
TCS is not alone. Infosys, Wipro, HCLTech and Tech Mahindra are all reworking strategies as global clients demand smarter, AI-driven solutions. The Indian IT sector employs over 5.67 million professionals, but up to half a million jobs could disappear in the next few years as automation replaces manual testing, infrastructure management, and basic coding. Mid-level professionals with four to twelve years of experience are seen as most vulnerable.
The external environment adds to the strain. Uncertain US trade policy, high global inflation, and cautious client spending have hurt demand for traditional outsourcing contracts. Clients are delaying discretionary projects and focusing on cost-cutting, often by opting for AI-powered services.
The old pyramid model of mass recruitment is giving way to leaner, specialised teams. TCS is training 25,000 engineers on Microsoft’s Azure OpenAI tools. Infosys is developing more than 100 generative AI agents to automate client workflows. Wipro and HCLTech are pivoting aggressively toward cloud computing and AI expertise. The message from industry leaders is blunt: reskill or risk redundancy.
Building intellectual property
To reduce dependence on foreign platforms, Indian IT firms are investing in homegrown research. TCS has launched an AI Centre of Excellence in Hyderabad, while Infosys is experimenting with vernacular AI models suited to India’s linguistic diversity. These initiatives are strengthened by collaborations with institutions such as IIT Kharagpur and IISc Bangalore.
The government’s IndiaAI Mission, launched in 2024 with a budget of ₹10,372 crore, is also helping firms access subsidised cloud infrastructure and national datasets. According to NASSCOM, AI-focused R&D investments rose 20% in FY25, a trend that could help Indian firms build proprietary intellectual property and differentiate themselves in global markets.
TCS, Infosys eye role as AI enablers
The industry is also working to shed its “body shop” image. TCS’s new unit will deliver AI-driven services in operations and engineering, while Tech Mahindra is designing sector-specific AI models. Affordable offerings such as DeepSeek’s R1 are being integrated into client projects, cutting costs while improving productivity.
At the same time, the rise of global capability centres (GCCs) in India—expected to employ 4–5 million by 2030—marks a shift towards specialised work in AI, data science, and cybersecurity. Firms are recruiting for niche skills rather than relying on armies of fresh graduates.
Opportunities amid uncertainty
The transition is proving painful. Job losses, shrinking mid-level opportunities, and muted revenue forecasts for FY26 weigh on the sector. Yet the long-term potential remains immense. The global AI market is projected to cross $1 trillion in 2025, with large investments in applications and infrastructure. India’s combination of scale, talent, and service expertise offers a chance to capture a meaningful share of that growth.
India’s IT industry stands at a crossroads. The challenge is to reinvent itself for the AI era, moving from volume-based outsourcing to innovation-led services. Success will depend on how quickly firms can retrain their workforce, build intellectual property, and align with the needs of global clients.
The choice before India’s tech sector is stark: adapt or be left behind. For now, the leading firms have chosen to adapt—painfully but decisively—in the hope of securing their place in the global AI revolution.