Sector growth has been in the low single digits for the past two years, according to HSBC, which last month attributed the sluggishness to economic uncertainty, competition from corporate in-house global capability centres<\/a> being set up rapidly across India, as well as \u201cambiguity\u201d over the impact of generative AI.<\/p>\n Major players Infosys, Tata Consultancy Services (TCS) and Wipro are keenly aware that AI is a double-edged sword. Nandan Nilekani, Infosys co-founder and chair, told the Financial Times that his company was working on \u201chundreds\u201d of AI projects with corporate partners, even as \u201cthis AI stuff has taken away some of the spending, because everybody is diverting money from other things to AI\u201d. <\/p>\n The tech billionaire said the sector\u2019s niche would be finding practical uses for the \u201cwhole cornucopia of technology\u201d developed by a handful of pioneering companies, such as OpenAI and Anthropic, that were \u201ccompeting to plant their stake in the ground\u201d as Big Tech in the US ploughed<\/a> hundreds of billions of dollars into AI.<\/p>\n \u201cI think in the next few years, the balance of spending will go from buying core infrastructure to making it useful to companies,\u201d Nilekani said in an interview in Bengaluru. \u201cIf you\u2019re helping Fortune 500 companies get their AI going, that requires a different approach \u2014 that\u2019s where Infosys comes in.\u201d<\/p>\n Infosys last month said it had built 300 agents, while it recently announced AI implementation deals with German energy provider Eon, Norway\u2019s DNB Bank and the UK\u2019s Lawn Tennis Association. At the same time, chief financial officer Jayesh Sanghrajka told analysts that some \u201cdiscretionary programmes\u201d had been paused by companies because of \u201csignificant investments\u201d in AI.<\/p>\n In TCS\u2019s recent quarterly results, India\u2019s largest IT company reported that consolidated revenue climbed just 1.3 per cent year on year, falling below analysts\u2019 forecasts despite it signing AI deals, such as modernising Virgin Atlantic\u2019s tech operations.<\/p>\n Aarthi Subramanian, the new chief operating officer at TCS, said the Mumbai-based company had seen \u201cstrong demand\u201d for AI and analysing data. She noted that TCS had built a product for AmTrust, a New York-based property and casualty insurer, to help brokers generate personalised quotes quickly.<\/p>\n Infosys and Wipro fared better with their earnings reports, which revealed signs of recovery as they secured multibillion-dollar projects and achieved sales growth that exceeded expectations.<\/p>\n HCLTech, the third-largest IT outsourcer in India, reported more mixed results, with revenue expansion exceeding forecasts, but quarterly net profit declining 9.7 per cent from a year ago.<\/p>\n Kumar Rakesh, a Mumbai-based IT analyst at BNP Paribas, said the June quarter was usually good for the sector, as clients released budgets earlier in the year. But more concerning for investors was commentary that demand had \u201cfurther deteriorated for some of these companies\u201d.<\/p>\n \u201cWhat that means is that the expectation that things will start improving in the second half may not necessarily materialise,\u201d he said.<\/p>\n While India\u2019s tech industry generated $284bn in annual revenues, some analysts predicted the sector faced inevitable cutbacks, as clients used AI to trim spending. <\/p>\n Aparna Iyer, chief financial officer at Wipro \u2014 India\u2019s fourth-largest IT company owned by the billionaire Premji family \u2014 said in an interview that AI adoption was still in the \u201cvery early\u201d stages, but Wipro\u2019s strategy was \u201canchored around that\u201d.<\/p>\n India Business Briefing<\/p>\n The Indian professional\u2019s must-read on business and policy in the world\u2019s fastest-growing big economy. Sign up for the newsletter here<\/a><\/p>\n \u201cEven as we are forming and rethinking, I think a lot of our clients are pretty much in the same phase,\u201d she added.<\/p>\n The size of India\u2019s AI market is expected to grow from up to $9bn in 2023 to as much as $22bn by 2027, according to estimates published last year in a joint report by Boston Consulting Group and Nasscom, India\u2019s IT industry trade body.<\/p>\n Yet, despite having leading IT companies and one of the world\u2019s largest pools of software engineering talent, India has been a relative latecomer<\/a> to AI innovation. Prime Minister Narendra Modi\u2019s government only launched its IndiaAI Mission to promote development last year, compared with China issuing an AI plan in 2017. New Delhi has now earmarked about $1.2bn to help increase AI capabilities and infrastructure over five years.<\/p>\n Indian government officials have also privately bemoaned the relatively late start in AI by some of its leading companies. <\/p>\n \u201cIdeally, TCS or Infosys should have invested in models 10 years or five years back,\u201d one official in New Delhi told the FT.<\/p>\n \u201cAlmost none of them are looking to use the AI wave as a way to move up the value chain, and build AI [large language models] themselves, or invest heavily in R&D in AI,\u201d said Anirudh Suri, non-resident scholar at the Carnegie India think-tank. \u201cIn a way, they\u2019re riding the wave of AI, but not planning heavily for a scenario where the wave actually disrupts them or their business model.\u201d<\/p>\n Recommended<\/p>\n![\"Infosys](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2025\/08\/https:\/\/d1e00ek4ebabms.cloudfront.net\/production\/8d00178d-1160-4639-9001-bd8f7f47d48f.jpg\")
Infosys chair Nandan Nilekani expects the balance of AI spending to shift from buying core infrastructure to making the technology useful to companies \u00a9 Kent Nishimura\/Bloomberg<\/p>\n![\"Line](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2025\/08\/https:\/\/d6c748xw2pzm8.cloudfront.net\/prod\/79e3ccc0-6df6-11f0-8d40-09d80783cb12-standard.png\")
<\/p>\n![\"TCS](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2025\/08\/https:\/\/d1e00ek4ebabms.cloudfront.net\/production\/38105839-eaca-498c-8e6b-3e6df5ad6322.jpg\")
TCS chief operating officer Aarthi Subramanian said the company was seeing strong AI demand \u00a9 Shashank Parade\/PTI via AP<\/p>\n
![\"A](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2025\/08\/https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/https%3A%2F%2Fd1e00ek4ebabms.cloudfront.net.jpeg\")
<\/a><\/p>\n