Artificial Intelligence Shifts Growth Strategies for Indian IT Majors, Amid Staggering Outlook Divergence

Indian IT Firms Navigate Global Pressures and AI-Driven Transformation

India's top IT firms, including TCS, Infosys, HCLTech, Wipro, and Tech Mahindra, have reached a turning point as they close FY26 amidst global economic pressures, West Asian geopolitical tensions, and the rapid rise of Artificial Intelligence (AI). According to a PTI report, the sector is steadily moving away from traditional effort-based services as AI-driven productivity begins to compress revenues in legacy businesses.

However, this pressure is being partly offset by a surge in large AI-led deals, pushing companies to shift from scale-based contracts to more outcome-driven, modular engagements. This transition is reflected in mixed outlooks for FY27, with TCS and Infosys indicating easing macro headwinds, while HCLTech and Wipro flagged continued uncertainty and weak discretionary spending.

A report by ICICI Direct noted that AI may cause about 2-3 per cent annual deflation in traditional IT services revenues for the next couple of years. Indian IT services could see an incremental AI-led Total Addressable Market (TAM) of USD 300-400 billion by 2030.

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Quarterly Performance Comparison

TCS reported a 12.22 per cent rise in March quarter net profit, with revenue growing 9.64 per cent to Rs 70,698 crore. For FY26, profit rose 1.35 per cent to Rs 49,210 crore, while revenue increased 4.58 per cent to Rs 2.67 lakh crore. The company said it is entering the new fiscal year with positive momentum, adding that most recent headwinds are behind it. Its annualised AI services revenue crossed USD 2.3 billion, accounting for over 6 per cent of total revenue.

TCS CEO K Krithivasan said the company is entering the new fiscal year with positive momentum driven by deal wins and expects limited impact from the West Asia crisis, largely confined to clients in travel, transportation, and the Gulf region.

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Infosys posted a 20.8 per cent jump in consolidated net profit to Rs 8,501 crore in the March quarter, with revenue rising 13.4 per cent to Rs 46,402 crore. For FY26, profit grew 10.20 per cent to Rs 29,440 crore and revenue rose 9.6 per cent to Rs 178,650 crore. The company acknowledged that AI is beginning to cannibalise traditional services, though growth in AI-led offerings is offsetting the impact.

HCLTech reported a 4.2 per cent rise in Q4 net profit to Rs 4,488 crore, with revenue up 12.34 per cent to Rs 33,981 crore. For FY26, profit declined 4.30 per cent to Rs 16,642 crore, while revenue increased 11.18 per cent to Rs 130,144 crore. The company projected FY27 growth of 1-4 per cent in constant currency, citing continued volatility.

Wipro reported a 1.89 per cent decline in Q4 net profit to Rs 3,501.8 crore, while revenue rose 7.6 per cent to Rs 24,236.3 crore. For FY26, net profit rose marginally by 0.47 per cent to Rs 13,197.4 crore, with revenue at Rs 92,624 crore. The company described the current macro environment as the “new normal”, shaped by geopolitical and policy disruptions, and approved a Rs 15,000 crore share buyback.

Tech Mahindra posted a 16 per cent increase in Q4 net profit to Rs 1,353.8 crore, with revenue up 12.6 per cent to Rs 15,076.1 crore. For FY26, profit rose 13.15 per cent to Rs 4,810.9 crore, while revenue grew 7.2 per cent to Rs 56,815.4 crore. The company said AI presents a significant medium- to long-term opportunity for client transformation rather than a risk to revenues.