Beyond the Old Playbook
The traditional business of Indian IT was built on labour arbitrage—providing skilled engineers for tasks like application maintenance, coding, and testing at a lower cost. Revenue was directly tied to billable hours and headcount. While this model turned
the sector into a global powerhouse, the rise of enterprise AI is disrupting this foundation. AI now automates many of the routine tasks that once required large teams, putting pressure on the old pricing models. However, instead of rendering IT services obsolete, AI is creating a massive new opportunity. The focus is shifting from simply executing tasks to providing strategic, AI-driven business outcomes.
The New AI-Powered Service Portfolio
Indian IT firms are rapidly developing new services that place AI at the core. These aren't just add-ons; they represent entirely new lines of business. According to industry body Nasscom, the Indian technology services sector is already generating an estimated $10-12 billion in revenue from AI services. New revenue streams include high-value AI consulting, modernising legacy systems, and building industry-specific AI solutions for sectors like banking, manufacturing, and healthcare. Companies are also creating and monetising proprietary AI platforms, such as Infosys Topaz and HCLTech's AI Force, which integrate AI into a client's core operations for the long term. This allows them to move up the value chain, acting as innovation partners rather than just service providers.
From Projects to Platforms and Partnerships
One of the most significant shifts is the move from one-off, project-based work to outcome-based contracts and recurring revenue models. Instead of billing for the number of engineers on a project, firms are increasingly pricing their services based on the measurable business value they deliver, such as cost savings or productivity gains. This creates a stronger, more strategic partnership with clients. Several companies are now explicitly reporting their AI-related revenues. Tata Consultancy Services (TCS), for instance, reported an annualized AI revenue run rate of $2.6 billion for the first quarter of FY27, an increase of 13.6% from the previous quarter. Similarly, HCLTech and Infosys have also begun disclosing their AI-related deal wins and revenue figures, signaling a clear move to monetise AI as a distinct business line.
A Transformation in Talent
This new era demands a different kind of workforce. While AI can automate routine coding and testing, it creates massive demand for specialised skills in areas like AI development, data science, machine learning, and AI governance. Indian IT companies are investing heavily in reskilling their vast workforces to meet this demand. Wipro, for example, launched a program in 2023 to train its entire workforce in AI capabilities. The focus is shifting from entry-level programmers to AI specialists, solution architects, and consultants who can help clients integrate AI deeply into their businesses. This evolution means that while overall hiring may slow, the value and expertise of the workforce are set to increase significantly.
