For the top four players in the Indian IT services industry, the last three years have been among the worst in over three decades. Impact on stakeholders like employees and others in the ecosystem apart, it has also been a challenging time for shareholders. In the last one year alone the shares of TCS, Infosys, HCL Technologies and Wipro are down by around 31, 26, 14 and 30 per cent, respectively, reflecting fears of AI disruption. Yet managements’ communication to stakeholders has been poor at best and misleading at worst. The press releases and analyst conference calls of most IT services companies present a positive picture. Any acknowledgment of AI driven disruption has been scant.
The communication is loaded with adjectives like ‘stellar results’, ‘strong performance’, ‘resilient execution’, ‘differentiated value propositions in enterprise AI’. But the numbers reflect the contrary. Three years of weak numbers is long enough for everyone to believe them over statements. As a result of this divergence, a trust deficit has come into being — one between what managements say, and what other stakeholders interpret. But now the moment of truth is near at hand. There has been a global run on IT stocks in the last two weeks following the launch of multiple AI tools by Anthropic. Since these can automate many white collar tasks, they have also starkly shown up how disruptive AI could turn out to be. This has been underplayed so far. Indian IT CXOs must respond to the situation by being open about their IT services business model. It really matters to employees, investors, policymakers and the broader ecosystem.
Over the last two weeks stakeholders have been bombarded with divergent views from industry experts, analysts and others — some saying the Indian IT industry will adapt as they have in the past, and others quite the contrary. It can be said in favour of the first lot that the cloud/digital disruption that upended the legacy business model of IT services firms (FY16 to end of FY18) was successfully overcome. This time, it is three years since the AI disruption began to unfold, yet the industry is mired in difficulty. During the cloud disruption, the top four players actually increased their headcount by 18 per cent to nearly 8.8 lakh employees. In the last three years it is marginally down at around minus 3 per cent to 14.33 lakh employees. This may be the tip of the iceberg. More AI disruption could mean uncertainty for employees and graduates entering the workforce.
So, this is not the time for frantic optimism. Let us not forget how the great handset companies of the past bit the dust on the arrival of the iPhone in 2007, even as their initial response was sanguine. Today, while companies talk about AI business they do not disclose the numbers. To give just one example, TCS has said that its annualised AI revenue was $1.8 billion as of end Q3FY26. This represents a mere 6 per cent of its revenue. The question of how non-AI business will be impacted remains unaddressed. All stakeholders — employees, investors, graduates, universities coming to grips with curriculum — need more transparent communication from IT CXOs.
Published on February 16, 2026