Artificial intelligence has crossed a symbolic threshold at India’s two largest IT services companies. In the July–September quarter (Q2 FY27), AI accounted for more than 10% of revenue at both Tata Consultancy Services (TCS) and Infosys for the first time, a sign that enterprise AI spending is moving from proofs of concept into production budgets.

What the numbers show

TCS said its annualised AI revenue has reached about $3.1 billion and now makes up more than a tenth of its overall business. According to Nikkei Asia, that AI revenue grew by more than 19% over the quarter. On its earnings call, the company pointed to AI-led deals, ecosystem partnerships and targeted acquisitions, including its proposed acquisition of MHP alongside the Porsche partnership, and new offerings such as the ADD AgentHub for drug discovery, domain-specific agentic control planes and Physical AI labs in Bengaluru and Pune.

Infosys reported that AI made up 10.5% of its Q2 revenue and grew 29% quarter-on-quarter. “As enterprises move to AI adoption at scale, the strong growth in AI revenues is a recognition of our differentiated market positioning and client confidence,” said CEO and MD Salil Parekh. The company also booked $5.2 billion in large-deal TCV, including a mega deal of over $2 billion.

HCLTech, which reports a separate advanced-AI line, put that revenue at $219 million for the quarter, up 28.4% sequentially, according to media reports.

Growth in AI, pressure elsewhere

The headline AI numbers sit alongside modest overall growth. TCS revenue grew 0.5% sequentially in constant currency, and Infosys revised its FY27 revenue guidance to 1%–2%. Analysts say AI-driven productivity is lifting margins and winning high-value modernisation contracts, but it is also shrinking revenue from traditional, effort-based work.

TCS CEO and MD K Krithivasan acknowledged both sides on the earnings call, describing a deflationary effect from productivity gains, while noting that clients using AI to modernise are also creating vendor-consolidation opportunities. He said it was too early to call the end of that deflation.

Industry analysts have also cautioned that the AI revenue figures are company-defined rather than standardised, and should not automatically be read as entirely new revenue that did not exist elsewhere in the business.

Why it matters

For CIOs and technology buyers, the disclosures are an important signal. Indian IT majors are now putting hard numbers on AI work instead of relying on partnership announcements and training counts. The next test is whether AI-led programmes can grow fast enough to offset the cannibalisation of legacy services, and whether the sector can turn agentic AI, AI-ready data foundations and autonomous operations into sustained top-line growth.

Sources: Infosys Q2 FY27 press release; TCS Q2 FY27 earnings call; Nikkei Asia; Moneycontrol.

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