Indian IT services firms say AI work is now over 10% of revenue

In short: Big Indian IT services companies are making more money from helping clients use AI, and this work now makes up more than 10% of their revenue.

What's going on

Indian IT services groups like Tata Consultancy Services (TCS) and Infosys say a growing share of their sales now comes from AI integration. That means helping other companies bring AI into their day to day work, like adding a new engine to an old car without breaking the rest of it.

In recent earnings reports, both TCS and Infosys said AI integration work now accounts for more than 10% of their total revenue. TCS said its AI revenue rose nearly 20% in the three months to the end of September compared with the previous quarter. Infosys said its AI revenue rose 29% over the same period.

The results helped boost investor confidence in the sector. The Nifty IT index rose more than 16% this month, after falling 27% from the start of the year until early October. Earlier this year, some investors worried that AI products from companies like OpenAI and Anthropic could reduce demand for outsourcing, which is a major part of India’s $300bn IT services industry.

Hiring is also picking up. India’s 24 listed IT services companies added more than 31,000 jobs since April, according to Vallum Capital.

What to watch

The picture is still mixed. Infosys cut its full year revenue growth forecast even as its AI related work increased. Analysts warned that it is too early to assume AI driven demand will fully offset other slowdowns.

Source: Financial Times