The End of the Experiment
The long-promised era of artificial intelligence driving real business for India's technology services industry has arrived. After years of small-scale experiments and proofs-of-concept, a significant portion of AI projects are moving into full production,
generating substantial revenue. According to the industry body Nasscom, Indian IT firms have already clocked an estimated $10-12 billion in AI-related services revenue. This marks a critical inflection point, signaling that global clients are no longer just testing the waters but are actively integrating AI into their core operations, with Indian tech companies as key partners in that transformation. Industry leaders report that nearly a quarter of all AI projects have now transitioned from the pilot phase to production. This shift is reflected in the changing nature of contracts, where clients are moving beyond isolated experiments to embed AI into larger modernisation programs.
Following the Money
The move to billable work is now clearly visible in the financial disclosures of top-tier firms. Many have started reporting specific revenue lines for AI, giving investors a clearer picture of the momentum. Infosys, for instance, reported annualized AI-related revenues of more than $1 billion in fiscal 2026. HCLTech disclosed AI-related revenues of $620 million on an annualized basis. While these figures still represent a fraction of the companies' multi-billion dollar overall revenues, the growth trajectory and the size of the deal pipeline are what's catching the market's attention. HCLTech reported that it crossed $2.6 billion in new bookings in a recent quarter for the first time without relying on any single mega-deal, pointing to a broad base of AI-centric contracts. Analysts note that a high percentage of new contracts signed since mid-2024 have been centered around artificial intelligence, underscoring the demand.
What 'AI Work' Actually Means
The revenue is not coming from one single type of service. Instead, it spans a wide spectrum of offerings that reflect both the opportunities and complexities of deploying AI at scale. According to Nasscom, the work includes technology orchestration, ensuring data readiness for AI models, modernizing legacy applications, and implementing AI governance and cybersecurity controls. Companies are also building industry-specific solutions, such as AI-powered platforms for financial crime detection or supply chain optimization. Another emerging area is 'agentic AI', where systems can perform tasks autonomously, which Nasscom projects could unlock an additional $300 to $400 billion in market opportunities by 2030. This diversification of services shows that AI is not simply about automating old tasks but creating entirely new streams of high-value work.
Building an AI-Ready Workforce
This transition would be impossible without a massive internal effort to reskill and upskill the workforce. Indian IT firms are investing heavily in training their employees to meet the new demand. The industry currently has more than 2 million professionals skilled in AI, with 100,000 to 200,000 of them trained in advanced capabilities. Tata Consultancy Services (TCS), for example, announced plans to train a force of up to 8,900 'forward-deployed engineers' who embed directly with clients to accelerate AI adoption. This focus on specialized roles highlights a shift away from the traditional headcount-based model towards one that values deep expertise and client collaboration. Companies are also using acquisitions to bring in niche AI talent and capabilities, buying smaller, specialized firms to fill gaps in their portfolios.
Challenges in a Changing Landscape
Despite the clear momentum, the path forward is not without its challenges. The rise of AI is also creating pricing pressure, as clients expect to share in the productivity gains. Some IT leaders have acknowledged that they are proactively working with clients to reduce technology spending through AI-driven efficiencies, which can impact revenue on existing contracts. Furthermore, clients are often opting for smaller, phased AI projects with quick returns rather than massive, multi-year commitments, which makes revenue streams more fragmented. A CRISIL Ratings report noted that weak discretionary spending and global uncertainties continue to weigh on overall demand, suggesting a mixed environment where AI is both a growth driver and a source of disruption.
