Tata Consultancy Services (TCS) is developing a strategy whereby the company intends to build a team of up to 8,900 engineers who will work directly with clients, while also exploring the possibility of acquiring companies in artificial intelligence and cybersecurity.
Strategy Amidst AI Growth
According to two TCS executives, the company is betting that artificial intelligence will create new business opportunities rather than undermine the outsourcing model. This strategy emerges against investor concerns that AI could disrupt the Indian IT sector, valued at $315 billion, by reducing demand for engineering teams, shortening project timelines, and putting downward pressure on prices.
Role of Engineers and Forecasts
CEO K. Kritivasan stated that the company's goal is to ensure that between 1% and 1.5% of its employees can be classified as Field Delivery Engineers (FDEs) working directly at the client site. These figures correspond to approximately 5,900–8,900 employees, based on TCS's headcount as of the end of June. However, Kritivasan did not specify whether the company will recruit new external talent or retrain existing personnel.
Engineers working directly with clients integrate into customer teams to accelerate AI adoption and tailor tools to specific business needs. This role has become a sought-after area of recruitment in a sector facing increased efficiency due to AI.
Competition and Acquisitions
This plan places TCS in competition with firms such as Microsoft, OpenAI, and Anthropic, which are also expanding their workforce of client-facing engineers to assist in implementing AI tools. The Mumbai-based company is also analyzing potential acquisitions in the fields of AI, data protection, and cybersecurity, after long avoiding such deals, relying instead on organic growth until the end of 2025.
CFO Samir Saxaria noted that they are exploring opportunities to strengthen their strategic position. Kritivasan refuted fears that AI would destroy the outsourcing model, asserting that companies still require partners like TCS for the integration and deployment of AI systems.
Significance of Expertise and Revenue Growth
He emphasized that TCS's key differentiator is its deep understanding of the client environment, which is not related to price arbitrage. He added that companies are increasingly using multiple AI models and need partners like TCS to connect these models with existing systems and manage data flows.
Despite this, TCS's annual revenue growth from AI slowed to 13% in the first quarter compared to 28% in the previous quarter. Kritivasan expressed a desire for the business to demonstrate around 25% quarterly growth in the long term but did not expect a linear trajectory. Samir Saxaria added that TCS invests about $1 billion annually in talent development and ensuring AI accessibility within the company, focusing particularly on training, targeted hiring, and niche recruitment in AI-focused technologies.