5 Key Takeaways
- TCS has crossed $3 billion in annualized AI revenue, representing more than one-tenth of its overall business and showing AI is now material.
- TCS’s CEO says traditional IT services growth will taper as enterprise spending shifts toward AI and newer technology services, with AI significantly offsetting that slowdown.
- AI adoption is still early, with customers only scratching the surface across areas such as AI model strategy, asset strategy, agent architecture, data modernization, and AI-led business outcomes.
- AI budgets are proving resilient despite geopolitical tensions, tariffs, and macroeconomic uncertainty, as enterprises prioritize AI opportunities they cannot afford to defer.
- TCS views AI as an efficiency multiplier rather than a cannibalizing force, expecting productivity gains to free capacity for new customer projects and shift employees toward higher-value AI, data, and modernization work.
BusinessLine Interview
Traditional IT Growth Is Tapering as AI Takes Centre Stage, Says TCS CEO
An interview with TCS CEO K. Krithivasan on AI revenue, structural shifts, budgets, and the workforce.
For much of the past three decades, large IT services companies grew by helping businesses run and maintain their technology systems. That model is now changing. Tata Consultancy Services, widely known as TCS, has crossed $3 billion in annualised artificial intelligence revenue, a threshold that represents more than a tenth of its overall business. TCS CEO K. Krithivasan says the rise of AI is not simply another service line; it is a structural shift in the company’s growth model. In an interview with BusinessLine in October 2026, he said traditional IT services are set to taper as enterprises move spending toward AI and newer technology services.
A milestone in AI revenue
The $3 billion figure is significant because it is annualised. That means if the current pace of AI-related work continued for a full year, TCS would generate more than $3 billion in revenue from AI alone. Crossing one-tenth of total business is a sign that AI has moved from pilot programs to a material part of the company’s revenue mix. For a company of TCS’s size, this is not a rounding error. It is a signal that client budgets are changing.
A structural shift, not a one-time bump
Traditional IT services include long-term contracts for application maintenance, infrastructure management, business process outsourcing, and technical support. These services have historically been stable, recurring sources of revenue for firms like TCS. But Krithivasan said that base is likely to grow more slowly. The decline, however, will not mean a shrinking company. He said the tapering of traditional services would be offset “in a significant way” by AI and other new services. That replacement is happening because enterprises are reworking their technology strategies around artificial intelligence, not just buying a few AI tools on the side.
Early days for AI adoption
Krithivasan said customers are only beginning to explore AI’s potential.
“Customers are scratching the surface” of AI opportunities, he said.
The areas he identified include AI model strategy, asset strategy, agent architecture, data modernisation, technology modernisation, and AI-led business outcomes. Each of these areas reflects the practical work behind AI adoption.
AI models are the mathematical systems that power tools such as predictive analytics, language processing, and image recognition. Asset strategy involves deciding which data, models, and software components a business should treat as long-term assets. Agent architecture refers to the design of AI agents, software programs that can carry out tasks on behalf of users. Data and technology modernisation is the essential work of upgrading old systems so AI can access clean, reliable information and operate at scale. AI-led business outcomes are the ultimate goal: using AI to improve revenue, reduce cost, or create new products rather than simply deploying technology for its own sake.
AI budgets prove resilient
The rise of AI is also changing how companies view economic risk. Global enterprises are eager to commit their technology investments despite geopolitical tensions, tariffs, and macroeconomic uncertainty. Krithivasan noted that over the past six months, customers have talked less about macroeconomic uncertainty and more about the opportunities AI presents. That is a noticeable change in tone.
In earlier periods, technology budgets often slowed when the global economy wobbled. Now AI is seen as a priority. Some sectors continue to face pressure from inflation and costs, but enterprises increasingly see AI as an opportunity they cannot afford to defer. If a competitor uses AI to lower costs or improve customer service, waiting too long could be costly.
The workforce question
Any conversation about AI raises concerns about jobs. TCS Chief Operating Officer Aarthi Subramanian addressed this directly. She emphasized that AI acts as an “efficiency multiplier” rather than a “cannibalizing force.” The phrase “efficiency multiplier” means AI helps employees get more done in less time. A “cannibalizing force” would mean AI eats into existing jobs or services.
Rather than shrinking headcount, automation-driven productivity gains free up capacity. TCS expects to redirect that capacity toward capturing new customer projects. The company is betting that surging transformation demand will outpace internal efficiency gains. In practice, this could mean employees move from routine maintenance and support tasks to higher-value AI, data, and modernisation work.
This view matters because TCS employs a large workforce, and its approach influences how other IT services firms think about automation. If AI makes existing teams more productive, TCS can take on more projects without hiring at the same rate. The company’s leadership is betting that client demand will be strong enough to absorb the extra capacity.
What happens next
The comments from TCS leadership point to a future in which AI is not a niche practice but the core of IT services growth. The traditional IT business will not disappear; it will simply grow more slowly. The company expects AI and other new services to fill the gap in a significant way. Enterprises are already shifting budgets, and TCS sees more demand ahead as customers move beyond early experiments. The next phase will likely involve larger, more complex AI projects that require data modernisation, model management, and agent deployment. TCS plans to use AI-driven productivity gains to serve more customers without adding headcount at the same pace. Whether the bet pays off depends on how quickly enterprises move from testing AI to scaling it. But for now, the signal from TCS is clear: AI has moved to the centre of the technology spending conversation, and traditional IT growth is no longer the main engine.
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