AI’s Productivity Gains Yet to Materially Lift IT Sector Performance

Despite widespread adoption of artificial intelligence across the IT services industry, the much-anticipated productivity boost has yet to show up meaningfully in audited financial metrics. While companies regularly highlight AI-driven coding efficiencies and workforce reskilling initiatives, hard data on per-employee productivity suggests that AI has not yet delivered a step-change in economic outcomes.

A review of key productivity indicators since 2020 shows that revenue and profit per employee across global and Indian IT services firms have remained broadly flat, with only modest improvement in select cases. The growing gap between the AI-led narrative and measurable productivity gains is raising questions about the pace of underlying organic growth in the sector.

The M&A Growth Engine

Between 2020 and early 2026, the top Indian IT services companies are estimated to have spent more than $4 billion on acquisitions to sustain growth and expand digital capabilities. In the first nine months of FY26 alone, Infosys, HCLTech, and Wipro together spent roughly $1 billion across seven transactions, largely focused on cloud, digital engineering, and consulting-led capabilities.

Globally, Cognizant has been particularly active. The company finalized its approximately $1.3 billion acquisition of U.S.-based Belcan in 2024, its second-largest deal to date, alongside the $430 million acquisition of Thirdera. More recently, in early January 2026, Cognizant completed the acquisition of 3Cloud, a Microsoft Azure specialist, to deepen its AI-enablement and cloud-modernization offerings.

The Productivity Benchmarks

Analysis by Ramkumar Ramamoorthy, partner at advisory firm Catalincs, highlights a more sobering reality in audited financials. Based on publicly reported financial statements and average employee counts—adjusted for reporting-period differences—the data shows limited productivity expansion:

• Accenture: Revenue per employee increased only marginally from about $86,000 in 2020 to roughly $89,000 in 2025, while EBIT per employee rose by just 3–4% over five years. Notably, Accenture has stopped reporting AI-specific revenue, arguing that AI is now too deeply embedded across offerings to track as a standalone line item.
• Infosys: Displays the clearest structural improvement among Indian peers, with revenue per employee rising from approximately $54,000 in 2020 to around $59,000 in 2025.
• TCS: Increased revenue per employee to roughly $50,000, up from about $47,000 in 2020. In late 2025, CEO K. Krithivasan quantified the company’s AI business for the first time, citing an annualized run rate of about $1.5 billion, growing at a double-digit quarter-on-quarter pace.

The Road Ahead

“Despite strong tailwinds such as acquisitions and favorable currency movements, key metrics like revenue and profit per employee have remained largely flat,” Ramamoorthy noted. He added that the sector is still in the early stages of building AI-ready talent pools and enterprise-grade use cases capable of driving sustained margin expansion.

The next 12 to 24 months are likely to be critical in determining whether AI can move beyond incremental efficiency gains and begin delivering measurable bottom-line impact across the IT services industry.

Summary

Audited metrics for global and Indian IT services firms show that per-employee revenue and profitability have remained broadly stagnant since 2020, despite significant investments in AI and digital transformation. While companies such as TCS and Infosys are beginning to report meaningful AI-related revenue run rates, the long-promised productivity “step-change” remains elusive—partly obscured by acquisition-led growth and currency effects.

Frequently Asked Questions (FAQs)

Q1: Has any company successfully quantified its AI revenue?

Yes. As of late 2025, TCS reported an annualized AI revenue run rate of approximately $1.5 billion. Accenture previously disclosed more than $2 billion in GenAI bookings before shifting to an integrated reporting model.

Q2: What is the 3Cloud deal mentioned?

Cognizant completed the acquisition of 3Cloud in early January 2026. The company is a leading Microsoft Azure partner, and the deal is intended to strengthen Cognizant’s AI-ready cloud infrastructure capabilities.

Q3: Which Indian IT firm has the highest revenue per employee?

Based on publicly reported data for 2025, Infosys leads its Indian peers at roughly $59,000 per employee, though it still trails global players such as Accenture.

Q4: Why is EBIT per employee flat if AI is improving coding productivity?

While AI can accelerate coding and delivery, firms face rising costs related to high-end AI talent, cloud and GPU infrastructure, and pricing pressure as clients demand faster and cheaper execution—offsetting near-term margin gains.