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10. October 2025
Tcs Unveils Billions-Dollar Bet On Future: Indian It Industry Embarks On Ai Revolution
Tata Consultancy Services’ (TCS) recent financial results sent a clear message: the Indian IT industry is on the cusp of a significant transformation. The company’s $6 billion investment in artificial intelligence (AI) over the next six to seven years is not only a major commitment but also a signal that the industry as a whole is rethinking its approach to business.
The numbers are telling. TCS reported $7.47 billion in revenue for the September quarter, a 0.61% increase from the previous quarter and a 2.66% decrease from last year’s corresponding period. This marks the first annual revenue decline for a Q2 in the company’s history. While this may seem like a minor blip on the radar, industry experts argue that it’s a sign of deeper structural changes underway.
At the heart of these changes is AI. TCS has committed to building 1 gigawatt (GW) of AI data centers over the next six to seven years, with an investment of $6-7 billion. This is the largest AI investment commitment ever made by the Indian tech giant. CEO K. Krithivasan explained that these centers will cater to “pure play AI providers, deep tech companies, hyperscalers, and government needs.” With about $1 billion invested for every 150 MW of capacity, TCS plans to provide a scalable and secure infrastructure for businesses looking to harness the power of AI.
Industry experts say that the shift is unlike previous technology waves. “The Indian tech SME industry has weathered many technology waves,” said Irshad Syed, partner at consultancy Slingshot. “But this AI wave questions the very basis of the predominant business model, which is based on cost arbitrage. Hence, this warrants a first principles approach.”
SMEs are expected to contribute 6-7% of India’s technology sector revenues in FY25, roughly $280 billion. According to Nasscom, SMEs account for over 70% of the country’s software exports and have been instrumental in driving growth. However, with the rise of AI, these firms face an unprecedented challenge.
The traditional business model that has relied on cost arbitrage is being disrupted by automation and artificial intelligence. Many SMEs are struggling to adapt to the changing landscape. According to a report by KPMG, over 70% of Indian companies believe that AI will significantly impact their operations over the next five years. However, only about 40% have a clear plan in place to address these changes.
So, what can SMEs do to survive and thrive in this new environment? Industry experts say that it’s time for a first principles approach. This means starting from scratch and redefining business models around AI-driven innovation. For many SMEs, this will require significant investment in research and development, talent acquisition, and infrastructure.
One way forward is to focus on emerging technologies like AI, cloud computing, and cybersecurity. These areas offer opportunities for growth and differentiation in a rapidly changing market. However, it’s not just about investing in new technologies; it’s also about developing the skills and talent needed to drive innovation.
The Indian government has recognized this need and launched initiatives aimed at promoting tech entrepreneurship and innovation. The Startup India program, for example, aims to promote startups and small businesses through a range of initiatives, including funding, mentorship, and tax incentives. Similarly, the Digital India program seeks to create a digitally empowered society by 2022.
However, more needs to be done to support SMEs in their journey towards AI-driven innovation. Industry experts argue that the government needs to provide more targeted support, including funding for research and development, tax breaks, and regulatory reforms aimed at encouraging innovation.
The future of Indian IT is bright, but it requires a fundamental shift in how businesses operate. The rise of AI demands that we rethink our approach to work, productivity, and innovation. It’s time for SMEs to take the lead in this transformation and drive growth and prosperity for all. With the right vision, strategy, and support, they can succeed in this new era of digital transformation.
The impact of this shift will be far-reaching, with significant implications for the industry as a whole. As AI continues to transform the business landscape, it’s essential that SMEs are equipped to adapt and thrive in this new environment. With the right mindset, skills, and support, they can navigate this changing landscape and emerge as leaders in the years to come.
The $6 billion investment by TCS is just the beginning of a larger shift towards AI-driven innovation. As the Indian IT industry continues to evolve, it’s crucial that SMEs are at the forefront of this transformation. With their unique strengths and agility, they can drive growth and prosperity for all stakeholders involved.
The Indian tech sector has always been characterized by its resilience and adaptability. From the early days of outsourcing to the current era of digital transformation, SMEs have consistently demonstrated their ability to innovate and thrive. As we embark on this new journey with AI, it’s time for SMEs to take the lead in this transformation and drive growth and prosperity for all.
The shift towards AI-driven innovation requires a fundamental rethink of business models and strategies. SMEs must be willing to disrupt their traditional approach and adopt new technologies that can drive growth and differentiation. With the right vision, strategy, and support, they can succeed in this new era of digital transformation.
The rise of AI demands that we rethink our approach to work, productivity, and innovation. It’s time for SMEs to take the lead in this transformation and drive growth and prosperity for all. The future of Indian IT is bright, but it requires a fundamental shift in how businesses operate. With the right mindset, skills, and support, they can succeed in this new era of digital transformation.