Business
AI Reshapes Business Model of India’s IT Majors
Tata Consultancy Services, Infosys, HCLTech, Wipro and Tech Mahindra ended FY26 at a critical turning point as India’s IT sector navigates a structural reset shaped by global macroeconomic headwinds, West Asian geopolitical risks, and the rapid rise of Artificial Intelligence.
Industry earnings analyses indicate the sector is moving away from traditional effort-based service delivery models.
AI-led productivity gains are causing revenue deflation in legacy services, reducing billing linked to manpower-intensive contracts.
However, this short-term pressure is being partially offset by a multi-billion-dollar surge in new AI-native deals, leading clients to shift priorities from large-scale outsourcing to modular, outcome-based contracts.
The transition is reflected in mixed FY27 outlooks and changing workforce metrics across the industry.
While TCS and Infosys indicated that the worst of macroeconomic pressures may be easing, peers such as HCLTech and Wipro cautioned about continued volatility and weak discretionary spending by clients.
The sector now faces a defining phase where future growth may depend on how quickly firms adapt to AI-led business models and higher-value digital transformation services.