Indian IT firms deepen AI reliance amid modest Q1 FY26 growth

Indian IT firms are further deepening their dependence on Artificial Intelligence (AI) to drive productivity, win deals, and future-proof their services, despite the subdued first-quarter growth (Q1 FY26) weighing on industry sentiment. These firms are increasingly rebranding themselves as AI-native enterprises, prioritising high-margin AI applications and integration over traditional IT transformation projects.

Most of the IT giants have underscored the strategic pivot towards AI in their latest annual reports. Indian IT bellwether Tata Consultancy Services (TCS) has framed its approach as ‘The Perpetually Adaptive Enterprise,’ while Infosys, the country’s second-largest IT firm, has positioned its strategy under the banner ‘AI Your Enterprise’. On its part, Wipro has emphasised its role in ‘Helping Clients Build AI-Powered Future-Ready Businesses,’ while Tech Mahindra encapsulated it with the tagline ‘AI Delivered Right.’

For the first quarter of FY26, TCS, Infosys, Wipro, HCL Technologies, and Tech Mahindra reported mixed results with revenue growth ranging from a marginal 0.8% for Wipro to a relatively stronger 8.1% for HCLTech. TCS posted a 1.3% increase in revenue to ₹63,437 crore, while net profit rose 5.9% to ₹12,760 crore.

“We continue to invest significantly in our business to stay relevant to our customers with changing technology needs. In this quarter, our associates invested 15 million hours in building expertise in emerging technologies, enabling them to lead the transformation journey for our customers. It is gratifying to note that TCS now has 114,000 people with higher-order AI skills,” TCS CEO K Krithivasan said in a post-earnings analyst call.

“Discretionary spending continues to remain under heightened scrutiny and pressure. However, enterprises focused on scaling AI adoption across applications, workflows, and data performance remain strong,” Krithivasan said, adding, leading firms in the US, the UK, Europe and Japan are consolidating vendors and business services while leveraging AI. TCS also implemented AI-powered solutions for many of its clients, he added.

These IT firms are also investing heavily in workforce upskilling. TCS reports over 100,000 employees have gained advanced AI/ML and GenAI skills, while Infosys states over 270,000 employees are now "AI-Aware." Similar trends are evident at Wipro and Tech Mahindra.

“Our large deals were at $3.8 billion. The main drivers of our growth were leadership in enterprise AI and continued success in clients selecting us for consolidations. We are seeing good demand for AI agents. We have built 300 agents across business operations and IT areas, and they are now deployed within our clients. Horizontal and vertical agents are helping our clients drive faster decisions, improve customer experience and improve operational efficiency,” Infosys CEO Salil Parekh said in the company’s post earnings call.

“I think we are seeing, with AI, a lot of productivity benefits. We also saw productivity benefits that we were already working on from automation and lean, which were coming through,” Parekh said, adding, on a macro basis, all clients are quite focused on enterprise AI.

“Clients are modernising their IT landscape with a sharp focus on AI-led efficiency and transformation,” Wipro Chief Executive Officer & Managing Director Srini Pallia said in the analyst call.

“In technology and communication, we are seeing a clear shift towards AI investments. Clients are looking to innovate and future-proof their software and platforms… Our focus is on using AI and automation to accelerate development, improve quality, reduce cost, and enable agile practices,” Pallia said.

“We at Wipro are building an AI-first, AI-everywhere enterprise focused on solving complex challenges, accelerating delivery, and reimagining operations at scale. By embracing autonomous and authentic AI, we are transforming business models and how organisations work,” he added.

Tech Mahindra Chief Executive Officer and Managing Director Mohit Joshi underscored the strategic significance of artificial intelligence.

“We now have a portfolio of 200-plus enterprise-grade AI agents across industry segments. Several of these are already in use at scale with our clients. Our agentic AI offerings also include a hybrid human and agent workforce,” Joshi said.

“TechM’s AI consulting practice enables clients to validate return on investments and prioritise AI use cases systematically and efficiently as they evaluate their AI roadmap. TechM is well-positioned to support clients effectively, enabled by a more experienced workforce that serves as a strong enabler and key differentiator for the offering. Our 77,000-plus employees across the company are trained in AI and Gen-AI, including a critical mass with advanced training and certifications,” he added.

HCL Technologies continues to position itself at the forefront of AI adoption, leveraging advanced capabilities to enhance service delivery, drive innovation, and support enterprise transformation across global markets.

“…Even though we have been hit by these unforeseen challenges, we remain committed to making investments in AI and go-to-market capabilities. In fact, given the growth momentum we are currently enjoying, we accelerated and pulled forward some of our Generative AI investments and the platform efforts that we are working on,” C. Vijayakumar, Chief Executive Officer & Managing Director at HCLTech, said in an earnings call.

“Our focus on application modernisation and longstanding strength is a key contributor to our success and the strong growth in our pipeline. We are doubling down on this trend by incorporating AI at the core of this proposition. Additionally, we are investing in an AI-driven data lifecycle management platform. There is a healthy demand for efficiency-led deals across the board,” he added.

New technology, new uncertainties

According to IT experts, AI's emergence introduces new uncertainties, requiring enterprises to address long-standing challenges. Modernising legacy systems and creating holistic data architectures for AI consumption are now critical.

Mahindra Group chairman Anand G. Mahindra had advocated for ‘AI foundries’ and ‘AI factories’ to foster innovation and scalability, likening AI to a gifted child prodigy with access to vast knowledge, capable of creating extraordinary value when used wisely.

The global AI market is projected to reach $1.3 trillion within the next decade. Instead of competing with OpenAI or Google by building their own LLMs, these IT firms are strengthening partnerships with hyperscalers (Microsoft, Google, and AWS) and chipmakers (Nvidia) to leverage the latest models and infrastructure.

IT firms are also setting up co-innovation spaces, with TCS creating AI Centers of Excellence and AI Labs, and Infosys building its AI foundry to allow clients to experiment with AI. Their strategy hinges on the belief that the greatest value will be derived from expertly integrating AI into all aspects of enterprise operations as AI becomes a utility.

Mid-sized tech firms winning the AI race

Meanwhile, mid-sized Indian IT firms like LTIMindtree, L&T Services, Coforge, Persistent Systems, Hexaware, and Mphasis are also making significant strides in the AI arena.

LTIMindtree is integrating AI into its large deals, including a $450 million deal with an agri-business company. It was also recognised as the ‘Google Partner of the Year 2025 for Industry Solutions in Manufacturing’ for the second consecutive year.

LTTS is actively pursuing AI opportunities, with 206 AI patents filed and the launch of the PLxAI framework to accelerate product development.

Mphasis is targeting growth at twice the industry rate, driven by a record $760 million in Q1 deal wins, 68% of which are AI-led, and a strong AI-led pipeline.

Coforge has launched Forge-X, an AI-powered delivery platform, and secured a significant $1.56 billion, 13-year deal with Sabre to accelerate AI-driven product delivery. This deal is expected to generate around $120 million in annual revenue.

Joseph Anantharaju of Happiest Minds Technologies highlighted their strong Q1 performance, driven by differentiated capabilities in Generative AI, Data, and Cybersecurity. Happiest Minds Technologies reported an 11.9 per cent increase in consolidated net profit, fuelled by AI strategies, with Ashok Soota expressing confidence in sustaining double-digit growth for the year.

As clients continue to focus on efficiency and consolidation, Indian IT firms are positioning AI not just as a tool for automation but as a strategic lever for transformation. While the near-term outlook remains cautious, the deepening reliance on AI signals a shift in how these companies are preparing for the next wave of digital demand.