India's IT giants struggle as AI threatens their core business models
India's top IT firms are facing growing uncertainty as artificial intelligence reshapes their industry. Despite recent revenue gains, concerns about long-term survival have intensified, with warnings that traditional IT services may disappear by 2030. Investors and analysts now question whether these companies can adapt quickly enough to stay relevant.
Since early 2024, major Indian IT firms like TCS, Infosys, and Wipro have shown uneven performance. Some reported modest revenue growth and better margins, thanks to AI-driven efficiency gains. Yet these improvements fell short of the aggressive targets that venture capitalist Vinod Khosla had earlier called essential for survival. By late 2025, unresolved questions about automation's impact on jobs and billing models continued to weigh on the sector.
In October 2025, TCS laid off 30,000 employees but still posted higher third-quarter revenue and net income. Infosys, meanwhile, delivered strong results and kept a positive outlook for the year. However, stock prices across the sector remained volatile, reflecting doubts about their ability to keep pace with AI advancements. The threat from AI is unlike past industry shifts, such as the Y2K boom that once boosted these firms. New tools like agentic AI and Anthropic's Claude Code now challenge their core business models. Even as India's services exports—including IT—hit a record $303 billion in the first nine months of 2025, the combined market value of TCS, Infosys, and others has fallen below that of unlisted AI firm Anthropic, now valued at $380 billion. In response, the IT majors have begun partnering with US hyperscalers and AI companies like OpenAI and Anthropic. But investment firms such as Jeffries and Citrini Research warn that these moves may not be enough to secure their medium-term future.
India's IT giants are at a crossroads, balancing short-term gains with the need for deeper transformation. Their recent partnerships and cost-cutting measures show urgency, but analysts stress that more radical changes may be required. The next few years will determine whether they can reinvent themselves—or risk fading in an AI-dominated market.
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