TCS CEO urges faster AI adoption despite potential revenue impact
By Axel Miller | 25 Feb 2026
Summary
Tata Consultancy Services is encouraging employees to use artificial intelligence to improve efficiency even if it reduces billable work, as the IT services industry grapples with investor concerns about how automation will reshape traditional business models.
MUMBAI, Feb. 25, 2026 — Tata Consultancy Services CEO K Krithivasan said the company is asking staff to prioritize artificial intelligence tools to deliver faster and more cost-effective outcomes for clients, even if doing so affects short-term revenue tied to labor-intensive projects.
Speaking at the Nasscom Technology and Leadership Forum in Mumbai, Krithivasan said companies must embrace technological change rather than resist it, noting that long-term competitiveness depends on adapting business models to AI-driven productivity gains.
Accepting disruption to the traditional IT model
India’s IT services industry has historically relied on labor-based contracts where revenue scales with headcount and billable hours.
AI tools that automate coding, testing, and maintenance tasks could reduce the need for large teams, prompting companies to rethink pricing and delivery models.
Krithivasan said the focus should remain on client value rather than preserving legacy revenue streams, emphasizing that efficiency gains could open new opportunities in higher-value services.
Sector faces investor scrutiny
The comments come amid heightened market volatility for Indian IT stocks as investors assess how automation may affect long-term growth and margins.
Analysts say the sector’s performance reflects uncertainty about the pace at which AI will reshape outsourcing demand and how quickly companies can transition to new revenue models.
Industry outlook: from linear to non-linear growth
Executives across the sector have increasingly framed AI as a shift from “linear” growth — hiring more employees to increase revenue — to a more technology-driven model where productivity gains play a larger role.
While automation could reduce demand for some routine tasks, industry leaders argue it will also create opportunities in areas such as AI integration, consulting, and digital transformation.
Why this matters
The Indian IT services industry is a major contributor to exports, employment, and corporate earnings. How companies adapt to AI will shape not only their growth trajectories but also the broader evolution of global outsourcing.
If firms successfully transition toward higher-value, AI-enabled services, they could sustain growth despite reduced reliance on labor-intensive work. Failure to adapt, however, could pressure margins and valuations.
FAQs
Q1. Why is TCS encouraging AI adoption even if it reduces revenue?
Because improving efficiency and delivering better outcomes for clients is expected to create new business opportunities over time.
Q2. How could AI change the IT services model?
By automating routine tasks, reducing dependence on large teams, and shifting focus toward consulting and high-value solutions.
Q3. Is the sector facing a slowdown?
Investors are reassessing growth prospects as automation changes demand patterns, leading to volatility in IT stocks.
Q4. Will AI reduce jobs in the industry?
Roles may evolve, with greater demand for AI-related skills, even as some routine tasks become automated.
Q5. What is the long-term outlook?
Most analysts expect the sector to remain important globally but with different growth drivers centered on productivity and innovation.
