TCS reports $3.1 billion in annualised AI revenue, while Infosys records 29% quarter-on-quarter growth, signalling that India’s IT giants are adapting to the AI revolution.
When Anthropic launched Claude Cowork earlier this year, it raised serious questions about the future of traditional IT services and software businesses. The AI tool demonstrated how advanced AI systems could perform tasks previously requiring substantial human effort, intensifying fears that technology companies such as Tata Consultancy Services (TCS) and Infosys could face unprecedented disruption.
The market reaction fuelled what became known as the “SaaSpocalypse”—a term describing fears that increasingly capable AI tools could undermine conventional software-as-a-service (SaaS) business models and reduce demand for traditional IT services.
Zoho founder and chief scientist Sridhar Vembu was among those who warned that the industry’s traditional business model could be vulnerable. He argued that companies spending disproportionately on sales and marketing rather than engineering and product development were particularly exposed to AI-driven disruption.
For a time, the outlook for established IT service providers appeared uncertain. However, several months later, India’s largest IT companies are demonstrating that AI could also become a significant source of growth.
TCS and Infosys Report Strong AI Revenue Growth
TCS reported annualised AI revenue of $3.1 billion in the second quarter of FY2027, representing an increase of more than 19% over the previous quarter. AI-related business accounted for approximately 10.1% of the company’s annualised revenue, according to the figures cited in its results.
Infosys has also reported substantial growth in its AI business, recording a 29% quarter-on-quarter increase in AI revenue. The company said AI accounted for 10.5% of its revenue.
These figures indicate that enterprise demand for AI-related services is expanding. However, they do not establish that the risks posed by AI to traditional software and outsourcing businesses have disappeared.
Instead, they suggest that established IT providers are attempting to turn a potential threat into a new business opportunity.
Fighting AI With AI
When advanced AI tools began raising concerns about the future of traditional IT services, companies had to decide whether to defend existing business models or adapt to the changing technological landscape.
TCS and Infosys have increasingly chosen the latter approach.
TCS has entered into agreements with OpenAI and Anthropic to incorporate AI capabilities into its offerings. Infosys has also pursued partnerships and expanded its AI services.
Both companies are investing in talent capable of connecting AI systems with clients’ existing technology infrastructure. One emerging role is that of the Forward Deployed Engineer (FDE), who works directly with customers to implement AI solutions, integrate systems and solve practical business problems.
Infosys has outlined plans to recruit approximately 6,000 FDEs over the coming years, while TCS has announced plans to build a team of around 8,900 professionals for this role.
The strategy reflects a broader shift: companies are moving beyond simply supplying software and towards helping clients deploy AI systems that deliver measurable business results.
How AI Is Changing Enterprise IT Projects
During its earnings call, TCS highlighted three areas of demand: AI-native solutions designed around business outcomes, AI-led transformation of enterprise systems, and autonomous Global Business Services.
The company cited an example involving a global industrial manufacturer in which an AI-native approach reduced the time required to move from a business lead to code from 4.7 days to less than an hour.
Infosys has similarly highlighted demand for modernising existing client systems using AI capabilities.
The opportunity lies not only in building new AI applications but also in upgrading legacy infrastructure, integrating data sources, automating workflows and ensuring that AI systems operate reliably within complex organisations.
These projects require more than access to a powerful AI model. They also require engineering expertise, testing, cybersecurity, regulatory compliance and an understanding of how a client’s existing systems function.
Businesses Are Moving Beyond AI Experiments
Industry observers say companies are increasingly looking for practical returns from AI rather than experimenting with the technology without a clear business objective.
Anil Agarwal, CEO of InCruiter, told India Today Tech that businesses are no longer treating AI merely as an experimental technology; they increasingly want to understand what it can deliver in real-world operations.
Rajesh Chhabra, general manager at Acronis, similarly observed that enterprises are beginning to integrate AI into everyday workflows, including application modernisation, data management, engineering, support and operations.
This shift creates opportunities for established IT service providers because businesses often prefer working with partners that already understand their infrastructure, data systems and compliance requirements.
Long-standing client relationships may therefore provide companies such as TCS and Infosys with an advantage when enterprises need help implementing AI at scale.
Infosys CEO Salil Parekh has also linked the company’s AI revenue growth to its market positioning and the confidence of its clients.
A Fundamental Change in the Indian IT Business Model
The response to AI disruption is not limited to new partnerships or hiring plans. Indian IT companies are also changing how they deliver services.
Biswajit Maity, senior principal analyst at Gartner, told India Today Tech that leading providers are increasingly using AI to improve productivity, automate delivery and expand the scope of transformation projects.
Rather than relying primarily on the number of employees assigned to a project, companies are attempting to focus more on productivity, automation, platforms and measurable business outcomes.
Infosys, for example, has expanded its AI offerings through its Topaz platform. The company says Topaz provides clients access to multiple open and closed-weight AI models, along with token optimisation intended to help manage costs.
Such platforms could help enterprises select and deploy suitable AI models while balancing performance, cost and business requirements.
The broader change is significant: traditional IT providers are attempting to become AI implementation and transformation partners rather than remaining dependent on labour-intensive services alone.
The Threat From AI Has Not Disappeared
Despite the reported growth, it would be premature to conclude that the SaaSpocalypse is over.
AI agents may automate tasks that previously required large teams of software developers, analysts and support professionals. This could put pressure on traditional service contracts, pricing models and employment requirements.
At the same time, new AI-related projects may generate additional revenue, but their long-term profitability will depend on how much value companies can deliver after accounting for technology costs, investment and competition.
The transition could also require extensive employee reskilling. Companies that fail to adapt their workforce and operating models may struggle to benefit from AI adoption.
Kanishk Agrawal, CEO of Path in AI Technologies, has emphasised the importance of combining industry knowledge with technological expertise. Continued employee training and productivity improvements will be essential for companies seeking sustainable growth.
Trust and Cybersecurity Will Shape the Next Phase
As businesses allow AI agents to perform more tasks and access sensitive information, questions about accountability, privacy and cybersecurity are becoming increasingly important.
Rajesh Chhabra of Acronis has argued that Indian IT companies could retain valuable client relationships by combining their scale and industry expertise with strong data protection and cyber resilience.
Enterprise customers need assurance that AI systems will operate within appropriate permissions, protect confidential information and produce reliable results. They also need clarity about responsibility when an AI system makes an error or takes an unintended action.
For Indian IT providers, establishing that trust could become an important part of competing in the AI era.
Tech Mahindra and HCLTech Also Pursue AI Opportunities
The shift towards AI is not limited to TCS and Infosys.
Tech Mahindra has announced a collaboration involving xAI’s Grok models for enterprise workflows, while HCLTech has also reported gains in its AI-related business.
These developments suggest that AI adoption is becoming a broader strategic priority across India’s technology-services sector.
However, the extent to which these investments translate into sustained revenue growth and stronger profits will vary by company and business segment.
Indian IT Has Adapted, but the Battle Is Far From Over
The latest AI revenue figures from TCS and Infosys demonstrate that established IT service providers can participate in the growing market for enterprise AI.
Their long-standing client relationships, engineering capabilities and understanding of complex business systems may help them compete in areas where customers need more than access to an AI model.
Yet revenue growth alone does not prove that the disruption has ended. The industry must still address automation-driven pricing pressure, changing workforce requirements, cybersecurity risks and competition from AI-native companies.
The central lesson is that AI can simultaneously disrupt existing business models and create new opportunities.
TCS and Infosys have begun adapting to that reality. Whether they can sustain their momentum will depend on how effectively they turn AI adoption into lasting customer value, productivity gains and profitable growth.
For now, the SaaSpocalypse debate remains unresolved. Indian IT companies have demonstrated that they can respond to the challenge—but the next phase of the AI transformation is still unfolding.