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The Hindu
AI reshapes India's IT services sector contracts as clients demand more for less
Artificial intelligence is reshaping contracts in India's IT services sector as leading firms like TCS and Infosys adapt to client demands for greater performance at reduced costs. The traditional reliance on billable hours is diminishing, forcing companies to embrace outcome-based pricing models to remain competitive. With a significant portion of contract negotiations now focused on efficiency and measurable outcomes, the landscape favors clients and smaller players. Industry giants are responding by embedding AI practices, which has led to a decrease in workforce size, signaling a shift in hiring needs and strategies.
MonitorConfidence: HighShort term horizonTalent displacement risk: High
Published 21 Aug 2026, 04:35 UTC5 min read
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Summary
TL;DR
- AI is leading to the restructuring of contracts in India's IT industry.
- Companies are increasingly tying fees to performance outcomes rather than hours worked.
- Smaller firms are becoming more competitive as larger companies lose traditional advantages.
- The pressure to deliver more for less is reshaping client expectations.
- IT giants are signaling potential reductions in hiring as roles change.
Interesting facts
- About 80% of TCS's contracts in business services are now based on performance.
- Persistent Systems and Coforge have seen significant revenue growth amidst these changes.