The AI Threat to Indian IT Services: Can TCS, Infosys, Wipro, and HCLTech Keep Up with Accenture and IBM?
The Indian IT services industry, a global powerhouse valued at $199 billion in FY24, has long been the backbone of digital transformation for enterprises worldwide. Giants like Tata Consultancy Services (TCS), Infosys, Wipro, and HCLTech have thrived by offering cost-effective, workforce-driven solutions. However, a seismic shift is underway, driven by artificial intelligence (AI), and it’s not just a technological evolution—it’s a competitive threat. Industry leaders Accenture and IBM are setting the pace in the AI services space, leveraging bold strategies and substantial investments, while Indian IT firms scramble to adapt. With Accenture’s latest earnings report showing a 5.8% revenue dip in Q2 2025 amid US policy shifts, the stakes are higher than ever. Here’s how this battle is unfolding and what it means for the future.
The AI Juggernauts: Accenture and IBM Lead the Charge
Accenture and IBM have emerged as frontrunners in the AI services race, capitalising on generative AI (GenAI) to redefine their offerings. Accenture reported $64.9 billion in revenue for its fiscal year 2023-24 (September-August), with consulting making up over half of that figure. Despite a recent 5.8% revenue decline in Q2 2025, linked to US federal policy shifts that froze procurement pipelines, the company’s AI ambitions remain robust. Accenture has secured $5.6 billion in GenAI bookings since September 2023, including $1.4 billion in the last quarter alone. This growth is fueled by a deliberate strategy that began over a decade ago, accelerating with a $3 billion investment in its AI and data practice in 2023. A key pillar of this strategy has been acquisitions—since 2020, Accenture has made over 20 AI-focused acquisitions, including deals exceeding $1 billion, such as the purchase of Umlaut in 2021 for engineering and AI expertise. These moves have bolstered its ability to deliver end-to-end AI solutions, from strategy to execution.
IBM, meanwhile, has staged a remarkable turnaround, with its consulting-led GenAI business hitting $5 billion in bookings and sales by early 2025. The company’s AI journey traces back to 2010-2012, when it launched Watson, a pioneering AI platform initially focused on natural language processing and analytics. Watson’s evolution into Watsonx, launched in July 2023, has expanded IBM’s capabilities to include chatbots, code generation, and enterprise AI deployment. IBM’s revenue grew by 4-6% in 2024, driven by AI-related spending, with its stock hitting a 40-year high of $220.84 in July 2024. Since CEO Arvind Krishna took the helm in 2020, IBM has acquired over 35 companies, nearly half enhancing its consulting arm, including the $339 million purchase of Advanced in 2024 for mainframe modernisation. This blend of software (25%) and consulting (75%) in its GenAI mix underscores IBM’s focus on high-value, AI-driven services.
The Indian IT Dilemma: Falling Behind in the AI Race?
Indian IT firms, despite their scale—TCS alone reported $29.1 billion in revenue for FY24—face a stark contrast. Collectively, TCS, Infosys, Wipro, and HCLTech generated $71.8 billion in FY24, but they don’t break out AI-specific revenue, leaving analysts and investors in the dark. While Accenture and IBM boast GenAI bookings of $5.6 billion and $5 billion, respectively, Indian firms’ silence on similar metrics hints at a lag. This opacity comes at a time when global clients are redirecting budgets from legacy IT services to AI-driven transformation, a trend DD Mishra of Gartner calls “not an Indian IT story, but an Accenture-specific challenge”—yet one that Indian firms cannot ignore.
The root of this gap lies in history and business models. Indian IT giants built their success on labor arbitrage and large-scale outsourcing, not consulting-led innovation. As AI automates routine tasks like coding and testing, this workforce-heavy model is under threat. A Mint report from September 2024 noted that Indian firms like TCS and Infosys are “struggling to match the momentum” of Accenture and IBM, facing lower client spending amid rising AI demand. Meanwhile, Accenture’s consulting business, which grew in June-August 2024 after six quarters of decline, highlights the advantage of a consulting-first approach—something Indian firms lack.
Strategies to Catch Up: How Indian IT Firms Are Pivoting
Indian IT companies are not standing still—they’re racing to board the AI bandwagon, albeit with varied approaches:
- Tata Consultancy Services (TCS): With over 500,000 employees, TCS is the largest Indian IT firm by revenue ($29.1 billion in FY24). It’s betting big on reskilling, targeting 40,000 AI-skilled freshers in 2024, and has launched AI-driven solutions like TCS AI WisdomNext. However, its conservative acquisition strategy—unlike Accenture and IBM—limits its pace. TCS secured $6.8 billion in deals in Q4 2020, but AI-specific growth remains undisclosed.
- Infosys: Infosys, with $14.2 billion in FY24 revenue and a 9.3% brand value increase to $14.2 billion in 2024, is pivoting to value-based pricing. It has trained over 250,000 employees in AI and launched Topaz, an AI-first offering, in 2023. Acquisitions like the $1.56 billion deal for in-tech in 2024 signal a shift, but its consulting arm remains nascent compared to Accenture’s.
- Wipro: Wipro, posting $10.8 billion in FY24 revenue, has trained 225,000 employees in AI and introduced ai360, an AI integration framework. Its $1.5 billion acquisition of Capco in 2021 boosted its consulting capabilities, yielding a 6.6% sequential growth in Q4 2024. Yet, its overall revenue growth remains flat at 0.01% QoQ, reflecting broader challenges.
- HCLTech: HCLTech, with $13.3 billion in FY24 revenue, grew 4.3% in Q3 FY24, outpacing peers. Its AI strategy includes HCLTech AI Force and acquisitions like the $279 million ASAP Group deal in 2023 for automotive AI expertise. Still, its focus on engineering services dilutes its consulting edge.
The Road Ahead: Innovation or Irrelevance?
The AI threat isn’t just about technology but business models. Accenture and IBM have shown that consulting-led, acquisition-driven strategies can unlock billions in AI revenue, while Indian firms’ reliance on workforce scale is losing steam. As HCLTech CEO C Vijayakumar noted, “We’re now focusing on delivering the same or higher revenue with fewer employees, leveraging AI and automation.” This shift to efficiency and value-based pricing is critical, but it’s a race against time.
For Indian IT giants, the playbook is clear: ramp up consulting, invest in AI talent, and pursue aggressive acquisitions. TCS, Infosys, Wipro, and HCLTech have the resources—collectively employing over 1.5 million people—but need transparency on AI revenue to reassure investors. The opportunity is vast with India’s IT services and software market projected to hit $160 billion by 2025, and the global AI services pie growing. Yet, as Accenture and IBM redefine the game, the question looms: can Indian IT rise to the AI challenge, or will it be outpaced by rivals who started earlier and bet bigger? The answer will shape the industry’s next decade.
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