13. January 2026
Tcs Takes Leap Forward With Ai Powerhouse As Indian It Sector Sees Record Growth
The Indian IT sector has been witnessing a significant transformation in recent years, driven by the growing importance of Artificial Intelligence (AI). Two of the major players in this space, TCS and HCLTech, have reported strong AI momentum in their latest financial statements. While both companies have made significant strides in adopting AI technologies, their approaches to integrating these solutions into their offerings differ substantially.
TCS, India’s largest IT services company, has been aggressively pushing its AI initiatives across various verticals. The company has announced that it has generated $1.8 billion in annualized AI revenue, which represents a 17.3% quarter-on-quarter increase in constant currency terms. This figure is significantly higher than HCLTech’s reported $146 million in ‘Advanced AI’ revenue for the same period, which accounts for a nearly 20% sequential growth.
However, upon closer examination, it becomes clear that TCS is counting almost all of its AI-infused services as part of its overall offerings. This includes AI embedded inside cloud, data, application, and industry projects. In contrast, HCLTech has been more selective in how it reports its AI-related revenue. The company only includes agentic AI, robotics, physical AI, AI factories, and large-scale data centers and product-led work as part of its ‘Advanced AI’ revenue.
This difference in approach highlights the varying degrees to which both companies are embracing AI technologies. While TCS is taking a more comprehensive approach to integrating AI solutions into its services, HCLTech is focusing on specific areas where it believes it can make the most impact.
The Indian government’s efforts to regulate synthetic data, which is generated using AI algorithms and models, have also come under scrutiny. Synthetic data has the potential to democratize access to AI by providing startups with the data they need to develop their own AI-powered solutions. However, if not managed properly, it could lead to the proliferation of fake data, compromising data integrity and privacy.
The Competition Commission of India’s market study on AI suggests that unregulated synthetic data presents significant risks. Without proper supervision, it could lead to a scenario where companies are generating and sharing fake data, which could have serious consequences for businesses and consumers alike.
As the IT sector continues to grapple with the implications of AI, regulation will play a crucial role in ensuring that these technologies are used responsibly. The government’s efforts to establish guidelines for AI development and adoption are a positive step in this direction.
The global IT services sector is undergoing a profound structural transformation, driven by the growing demand for Artificial Intelligence (AI) solutions. Clients are increasingly seeking vendors who can offer not only cost-effective services but also the ability to drive business growth through AI-powered innovations. This has led to a shift towards mega-deals, which are contracts of a larger size, longer duration, and higher Total Contract Value (TCV), even as the overall volume of contracts remains relatively flat.
Recent examples of this trend include Infosys’ €14,000 crore ($1.6 billion) 15-year mega-deal with NHS for workforce management, which integrates AI-driven tools to streamline operations. Similarly, TCS has secured a $640 million, seven-year contract with Danish insurance firm, Danmarks Landspensionist Forening (DLF), to develop an AI-powered platform for processing claims.
The Indian IT sector is facing significant challenges in its quest to become a $400 billion industry by 2030. Despite growing investments and adoption of AI technologies, the sector’s dependence on traditional business models and lack of innovation are major roadblocks. The sector’s reliance on time-and-materials models, which tie revenue to billable hours, is also a major drag.
Large language models and automation are cutting into these hours, making it challenging for IT firms to maintain their revenue growth. While every major IT firm talks about “AI transformation,” the reality is that revenue per employee has barely moved. Neeti Sharma, CEO of TeamLease Digital, has stated that the sector is at the “lowest of lows.”
Meanwhile, India’s AI economy has entered a high-stakes phase, with over $20 billion in new AI investment commitments poured in this year alone. However, on the ground, startup founders are facing a different reality. Funding rounds have slowed, enterprise pilots have stretched longer, and the real work of translating policy and capital into product-market traction is just beginning.
The unearthing of the India AI Governance Guidelines has prompted a wave of reactions from policy experts, legal commentators, and AI governance specialists. While the framework’s intent received praise, experts have sought clarity on how its principles will translate into operational safeguards.
The Ministry of Electronics and Information Technology (MeitY), under the IndiaAI Mission, announced the guidelines as a national framework to ensure safe, inclusive, and responsible adoption of artificial intelligence across sectors. Launched by principal scientific adviser Ajay Kumar Sood in November 2022, the document outlines India’s most coordinated effort yet to guide AI development at scale ahead of the India AI Impact Summit 2026.
The Indian IT sector is undergoing a significant transformation driven by the growing importance of Artificial Intelligence (AI). While TCS and HCLTech are making strides in adopting AI technologies, their approaches differ significantly. The government’s efforts to regulate synthetic data, establish guidelines for AI development, and promote responsible adoption of AI are crucial steps towards ensuring that these technologies are used responsibly. As the sector continues to evolve, it is essential to prioritize innovation, efficiency, and sustainability to achieve its ambitious goals.
The growing demand for Artificial Intelligence (AI) solutions has led to a shift in the global IT services sector. Clients are seeking vendors who can offer not only cost-effective services but also the ability to drive business growth through AI-powered innovations. This has resulted in mega-deals of larger size, longer duration, and higher Total Contract Value (TCV.
The Indian government’s efforts to regulate synthetic data have come under scrutiny. Synthetic data generated using AI algorithms and models has the potential to democratize access to AI by providing startups with the data they need to develop their own AI-powered solutions. However, if not managed properly, it could lead to the proliferation of fake data, compromising data integrity and privacy.
The Competition Commission of India’s market study on AI suggests that unregulated synthetic data presents significant risks. Without proper supervision, it could lead to a scenario where companies are generating and sharing fake data, which could have serious consequences for businesses and consumers alike.
As the IT sector continues to grapple with the implications of AI, regulation will play a crucial role in ensuring that these technologies are used responsibly. The government’s efforts to establish guidelines for AI development and adoption are a positive step in this direction.
Recent examples of the trend towards mega-deals include Infosys’ €14,000 crore ($1.6 billion) 15-year deal with NHS for workforce management, which integrates AI-driven tools to streamline operations. TCS has also secured a $640 million, seven-year contract with Danish insurance firm, Danmarks Landspensionist Forening (DLF), to develop an AI-powered platform for processing claims.
The Indian IT sector faces significant challenges in its quest to become a $400 billion industry by 2030. Despite growing investments and adoption of AI technologies, the sector’s dependence on traditional business models and lack of innovation are major roadblocks. The sector’s reliance on time-and-materials models, which tie revenue to billable hours, is also a major drag.
Large language models and automation are cutting into these hours, making it challenging for IT firms to maintain their revenue growth. While every major IT firm talks about “AI transformation,” the reality is that revenue per employee has barely moved.
Meanwhile, India’s AI economy has entered a high-stakes phase, with over $20 billion in new AI investment commitments poured in this year alone. However, on the ground, startup founders are facing a different reality. Funding rounds have slowed, enterprise pilots have stretched longer, and the real work of translating policy and capital into product-market traction is just beginning.
The unearthing of the India AI Governance Guidelines has prompted reactions from policy experts, legal commentators, and AI governance specialists. While the framework’s intent received praise, experts have sought clarity on how its principles will translate into operational safeguards.
The Ministry of Electronics and Information Technology (MeitY), under the IndiaAI Mission, announced the guidelines as a national framework to ensure safe, inclusive, and responsible adoption of artificial intelligence across sectors. Launched by principal scientific adviser Ajay Kumar Sood in November 2022, the document outlines India’s most coordinated effort yet to guide AI development at scale ahead of the India AI Impact Summit 2026.
The Indian IT sector is undergoing a significant transformation driven by the growing importance of Artificial Intelligence (AI). While TCS and HCLTech are making strides in adopting AI technologies, their approaches differ significantly. The government’s efforts to regulate synthetic data, establish guidelines for AI development, and promote responsible adoption of AI are crucial steps towards ensuring that these technologies are used responsibly.
As the sector continues to evolve, it is essential to prioritize innovation, efficiency, and sustainability to achieve its ambitious goals.