TCS Sees AI as Growth Driver, Not Threat to IT Services

Tata Consultancy Services (TCS) has reaffirmed its confidence in the long-term relevance of the IT services industry, pushing back against concerns that rapid advances in artificial intelligence could disrupt the traditional outsourcing model. The company believes AI will expand the scope of technology services rather than diminish it. 

TCS Rejects Obsolescence Concerns Around IT Services 

Commenting on concerns around AI replacing traditional IT services, TCS Chief Executive Officer K Krithivasan said the industry has repeatedly demonstrated resilience despite periodic predictions of decline. 

“We have been writing its obituary every 10 years, but I think Indian IT services have proven to be very resilient,” Krithivasan told The Economic Times, adding that the industry’s strength lies in its “depth of skill sets” rather than cost arbitrage. 

Management stated that enterprises are increasingly expected to rely on service providers to help implement, integrate, and scale AI-led solutions across their organisations. 

AI Adoption Creating New Service Opportunities 

TCS believes the gap between technological innovation and enterprise deployment remains substantial, creating significant opportunity for IT service providers. The company said businesses still require support in embedding AI into legacy systems and operational workflows. 

Chief Operating Officer Aarthi Subramanian said generative AI is emerging as a key enabler for legacy modernisation, helping enterprises upgrade older technology stacks and reduce technical debt. 

The company added that internally it views recent advances in AI systems as productivity enablers rather than competitive threats. 

Deal Pipeline Remains Strong Despite Revenue Pressure 

The company’s comments come after TCS reported a 2.4% decline in annual revenue, its first full-year contraction since listing, amid slower global technology spending.  

However, management attributed the decline partly to the completion of a major transformation programme in the first quarter and highlighted sequential improvement through the remainder of the year. 

TCS reported record total contract value of $40.7 billion for FY26, including $12 billion in deal wins during the March quarter, indicating sustained client demand. 

“Customers are actually becoming more confident in investing in their projects and the decision-making cycle is improving,” Krithivasan said. 

AI Productivity Gains Reshaping Deal Structures 

TCS noted that clients are increasingly moving towards bundled, large-scale transformation contracts where AI plays a central role.  

Annualised AI-related revenue has crossed $2.3 billion, while productivity improvements from AI coding assistants have improved to 15-30%. 

Management acknowledged that AI-driven productivity could create pricing pressure in some contracts but said such impact is being offset by rising demand for new transformation projects. 

Hiring And Capability Expansion Continue 

The company said its restructuring cycle has now concluded and it remains focused on capability expansion through both hiring and acquisitions.  

TCS added around 44,000 trainees during FY26 and has issued 25,000 offers for the next cycle. 

It also remains open to strategic acquisitions to strengthen capabilities, following recent transactions such as Coastal Cloud and ListEngage. 

Read More: TCS Reports ₹1,268 Crore Restructuring Spend as Headcount Declines in FY26! 

TCS Share Price Performance 

As of 13 April 2026, TCS share price closed at ₹2,470.70 per share, reflecting a decline of 2.12% from the previous closing price. 

Conclusion 

TCS believes AI will act as a catalyst rather than a disruptor for IT services, with growing enterprise adoption expected to create fresh demand for transformation-led technology engagements. 

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