Tata Consultancy Services’ second-quarter numbers look like a warning wrapped in a pivot. India’s largest software exporter reported $7.47 billion in revenue for the September quarter, up a weak 0.61% from the previous quarter and down 2.66% from last year—the first annual revenue decline for a Q2 in its history.
Amidst this, the company said during the analyst call that it plans to invest $6–7 billion over the next six to seven years to build 1 GW of AI data centres. It’s the biggest AI investment commitment ever made by the Indian tech giant.
CEO K Krithivasan said these centres would cater to “pure play AI providers, deep tech companies, hyperscalers, and government needs,” with about $1 billion invested for every 150 MW of capacity. The company will rely on a mix of equity, debt, and cash partners to fund it.
This places the company among the AI cloud providers in India, such as Yotta, NxtGen, and others, who are empanelled under the IndiaAI Mission to provide GPUs to the selected startups for building foundational models.
For TCS, this opens up opportunities to collaborate with startups to further India’s AI ambitions, as the company has already been working with NVIDIA on several AI solutions for clients.
While commenting on the company’s Q2 results, Shubham Rathore, principal analyst at Gartner, told AIM, “Enterprises are recalibrating their technology investments, particularly in AI, favouring proven, off-the-shelf solutions over ambitious custom development.”
A Hard Turn?
For a company known for being conservative to the point of inertia, this is a hard turn. TCS has set up three AI units in the last three years, but only now appears to be consolidating that push under a single strategy, led by its new AI and Services Transformation unit head Amit Kapur.
It announced to foster an AI-first culture and talent, as well as “ideate and build with AI” Hackathon with 275,000 TCS employees.
Krithivasan told analysts that every project they do going forward will be AI-led and acknowledged that automation will increase productivity and reduce traditional billing.
The move comes at a time when TCS is under pressure on multiple fronts—slow growth, layoffs, and US visa headwinds. The company has announced a cut of 12,200 jobs in middle and senior roles, its steepest reduction in years. Its net profit for the quarter fell 1.94% sequentially to $1.46 billion, with a one-time restructuring cost of $129 million eating into margins.
Despite that, TCS went ahead with a $72.3 million acquisition of US-based marketing tech firm ListEngage, its largest buyout since 2013.
In the face of these bold moves, the company’s US business is facing scrutiny. According to reports, lawmakers have accused it of replacing older American workers with South Asian H-1B hires.
With Trump’s decision to hike H-1B visa fees to $100,000 next year, offshoring will only get more expensive.
Krithivasan claims TCS has “significantly localised” its workforce in the US. IT companies that rely on cheap offshore labour and hourly billing now face a world where AI can perform much of the routine work they charge clients for
Accenture has already learned the hard way that AI is not a magic growth lever. The company reported $69.7 billion in annual revenue and $2.7 billion in AI-related revenue, but it also laid off 11,000 employees.
Julie Sweet, its CEO, admitted that value realisation from AI has been “underwhelming” and large-scale enterprise adoption remains slow.
Wake Up Call for Indian IT
Indian IT firms have so far been spectators to this slowdown. Infosys, Wipro, HCLTech, and Tech Mahindra are yet to report any tangible AI revenue. Infosys claims it has built 300 AI agents and has seen “good demand,” but that’s nowhere close to monetisation at Accenture’s scale.
This, despite most firms saying AI is now part of almost all deals.
Gaurav Vasu of Unearth Insights told AIM earlier that most Indian IT firms are still in the early stages of their journey with GenAI. “They currently focus on AI-embedded services and have yet to announce large-scale, GenAI-specific deals,” he said.
TCS’s plan to spend up to $7 billion on AI data infrastructure could change that equation. Already, HCLTech has announced its multi-year partnership with OpenAI, Cognizant is going full vibe-coding, and Tech Mahindra is now part of the IndiaAI Mission.
By building large-scale infrastructure, the company is positioning itself to support domestic and global demand for AI compute. And such investments could shape the next phase of growth for the Indian IT industry.
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