India’s top three technology outsourcers, together valued at $210 billion, have dismissed concerns that modern artificial intelligence (AI) could upend their businesses, even as investors remain on the edge and questions hang over the industry’s future.
These homegrown IT majors—Tata Consultancy Services (TCS), Infosys, HCL Technologies (HCLTech)—will be under the spotlight on Tuesday at industry body Nasscom’s annual meet, which provides an annual stock taking of the sector and signals where India’s technology services industry is headed.
On Saturday, Roshni Nadar-Malhotra, chairperson of HCL Technologies, said the industry had taken to technological cycles in the past and that “this is not the first time that we’ve been here”.
“The industry has adapted to many technological cycles over the many decades. For us, AI is going to be a force multiplier. It’s a good thing, because companies will always need software services. AI is like blocks of Lego, and you’re not just going to make sense of it without having someone tell you what to make of it,” Nadar-Malhotra said at a media roundtable on the sidelines of the group’s first semiconductor project inauguration in Jewar, Uttar Pradesh.
The key, Nadar-Malhotra said, is that enterprise adoption of AI will grow at a far slower pace, as businesses evaluate the market even as consumers join the hype cycle.
“God built the world in seven days because there was no installed base of people. In IT services, you’re talking about a massive installed base and complexities of three to four decades,” she said. “We work with enterprises, and a lot of what people see through LLMs is commercial, and the pace of progress in both of them are very different.”
Earlier, on 17 February, Infosys chairman Nandan Nilekani said AI technology development has outpaced tech capabilities of large companies. “The main thing is that the technology is far ahead of its deployment. Because of this race and spending billions on some AGI (artificial general intelligence) and all that, the technology is moving faster than the ability of enterprises to deploy it,” he said at the company’s first investor day.
“Fundamentally, we have a situation where there’s a deployment gap between the power of the technology and the capacity of businesses to use this. If you think that some better product has come, nothing is going to happen because the problem is in how fast companies can implement,” said Nilekani, adding that Infosys can address this deployment gap.
Two days later, Tata Sons chairman N. Chandrasekaran voiced a similar opinion.
“The value proposition is different for each industry, and the value proposition for each company will be different, depending upon where they are. Where is it that they will look for productivity? Where is it that they will look for a new business model? Where is it that they will create a unique differentiated differentiator? That is where IT services companies will work with the enterprise customers,” said Chandrasekaran.
Later, 19 February, in a fireside chat with OpenAI chief Sam Altman at Delhi’s Travancore Palace, Chandrasekaran said that in the long run, the adoption of enterprise AI will transform the market for employees as well.
“We have 1.1 billion working people. A job in hand will be able to get everyone excited, for which everyone will be AI ready. In India, 750 million people will likely become white-collar employees, and the rest 350 million would be in blue-collar jobs,” he said. “Education is key, and it’s not difficult to crack it with AI. Once we do, we’ll see a different world. The question is to see how fast we can get it done.”
Growth concerns
Last year, Nasscom’s annual IT survey had pegged the industry at $283 billion in annual revenue, growing at 5% over $269 billion in 2024. After a steady growth pace projected for the industry last year, all eyes will be on the industry body’s projection for this year, as many warn of at least two fiscal years of slowdown, despite assurances from the industry’s top promoters.
As of 31 December, TCS reported annualized AI revenue of $1.8 billion. Infosys and HCLTech reported AI-related revenue and advanced AI revenue of $280 million and $146 million during October-December 2025, respectively.
Concerns surrounding automation tools come as the country’s IT services sector has been grappling with slow growth over the last three years, primarily on account of geopolitical uncertainty and US president Donald Trump’s tariff-related flip-flops, causing Fortune 500 clients in their top market, North America, to be jittery.
TCS, Infosys and HCLTech have each reported full-year revenue growth at below 5% for the last two years. This comes after two successive years of double-digit growth during the covid pandemic, which saw large companies engaging IT service providers to digitize their operations. TCS, Infosys and HCLTech ended FY25 with $30.2 billion, $19.3 billion and $13.8 billion in revenue, respectively.
The rise of generative AI since the launch of ChatGPT in November 2022 has also led to apprehensions on clients holding back tech spending as AI tools could automate much of the work done by humans. This has led to analysts raising concern surrounding revenue decline in the short term, but dismissed fears of existential threat to IT services.
A 17 February report by Bank of Baroda Capital Markets said that while AI reducing workforce demand “could put revenue growth and profit estimates at risk”, this was “not an existential risk”.
“AI embrace by enterprises is low or slow as many are not ready, CIOs (chief information officers) may want AI models to stabilize, RoI (returns on investment) thresholds need to be met, there is room for further reduction in errors by AI models, integrators are required to make AI work with varied legacy tech of enterprises, and deep domain skills are required,” the report said.
OpenAI’s Altman also dismissed the notion that AI companies would “kill” software and technology services firms, despite automation eating up large parts of the latter’s core work.
“I am optimistic that we are going to drive prices down more than anyone thinks is possible or reasonable or likely. Using AI can become absolutely cheaper for India to use at scale, and we are moving actively in this direction,” he said in a roundtable with Mint on 19 February.
Mixed view
Concerns around the death knell for the IT services sector comes after India’s $283 billion IT sector lost at least $45 billion in market value in the first six weeks of this year.
The knee-jerk reaction came after OpenAI’s GPT 5.3-Codex and Anthropic’s Claude 4.6-Cowork demonstrated abilities to automate tasks such as sales invoicing, legal processes and more, which is handled by TCS, Infosys, and HCLTech. Shares of these IT firms fell 10-14% in five days, after Anthropic and OpenAI’s launches.
Still, like Altman, many believe that AI could actually lead to being a new growth vector for IT services.
“Enterprises won’t splurge on AI until they see clear business returns, and for them, the big takeaway will be to ensure that it works with legacy systems and gives actual benefits—none of which should kill the middleware layer of technology firms,” Ana Paula Assis, senior vice-president and chair for Europe, Middle East, Africa and Asia Pacific at IBM, told Mint.
On 9 February, analysts at brokerage firm Investec also argued in favour of the tech outsourcers, and said they “should benefit from legacy code modernization, migration of legacy SaaS (software as a service) applications, building AI foundation layers for enterprises and physical AI, among other opportunities.”
On 15 February, analysts at Kotak Institutional Equities also questioned if OpenAI and Anthropic’s advancements were hyped more than what there were worth.
“Benchmarking results (of AI models) aligned more with incremental improvements rather than a large step-up in capabilities. There are standout cases, but the average experience remains mixed…” the note said. “It is difficult to justify expectations of a large disruption to the IT services industry from version upgrades with meaningful, but incremental improvements.”