TCS CEO K. Krithivasan made a bold strategic declaration: he has instructed his 600,000+ employees to aggressively offer AI-driven efficiencies to clients, even if those efficiencies lead to a reduction in the company’s billable hours and revenue.
This “revenue cannibalization” strategy is designed to ensure TCS remains relevant as the global IT services model shifts from labor-heavy billing to outcome-based AI delivery.
The “Cannibalization” Mandate
Krithivasan’s message to his associates was transparent and direct, aimed at overcoming the internal fear that AI might destroy the very business it is meant to improve.
- The Core Instruction: “If you find that you can do something faster, better, cheaper with AI, you should probably go and tell your customers, even if it cannibalizes revenue.”
- The “Livelihood” Argument: He emphasized that TCS is not afraid of AI taking away jobs or revenue. Instead, he believes being the “first mover” in offering AI-led cost savings will build deeper client trust and open up larger, more complex high-value opportunities in the long run.
- Seniority Skill Gap: Krithivasan noted an internal trend where junior employees are outpacing senior management in AI proficiency. To counter this, he has “insisted” that every senior leader at TCS “dirty their hands” by building a practical AI solution rather than just reading about the technology.
Why Now? The February IT Market Crisis
The timing of this announcement is critical, as the Indian IT sector has been in the midst of its worst month in over two decades.
| Market Metric | Status (as of Feb 27, 2026) |
| Nifty IT Index | Down 21% in February — its worst monthly performance in nearly 23 years. |
| Market Cap Wipeout | Over $68 billion in value has been erased from Indian IT firms this month alone. |
| Investor Anxiety | Stock sell-offs are driven by fears that “Agentic AI” will automate away the millions of back-office and coding jobs that form the backbone of the Indian outsourcing model. |
TCS’s AI Financial Performance
Despite the market downturn, TCS’s AI business is showing explosive growth:
- Annualized AI Revenue: Reached $1.8 billion as of Q3 FY26, reflecting a 17.3% quarter-on-quarter growth.
- AI Workforce: Over 217,000 associates have already been trained in advanced AI competencies.
- Infrastructure Bet: TCS is moving ahead with plans for a 1-gigawatt AI-ready data center network over the next 5–7 years to host “sovereign AI” for global clients.
The “New Services” Strategy
Krithivasan argued that the industry must look beyond simple productivity gains (doing the same work with fewer people) and focus on New Service Creation:
- Data Orchestration: Helping clients organize “messy” legacy data so it can be used by AI.
- AI Governance: Using AI “agents” to monitor and govern other AI systems for security and bias.
- Next-Gen Platforms: Launching tools like TCS BaNCS AI Compass, which uses a new AI core to automate decision-making for banks.
Industry Alignment: TCS’s stance mirrors that of Wipro, whose leadership also stated this week that AI will eventually “create more jobs than it displaces” by expanding the total volume of technology projects worldwide.
