AI reshapes India IT services contracts

Artificial intelligence is fundamentally reshaping India's $315 billion IT services industry. Major outsourcing firms including Tata Consultancy Services, Infosys, Wipro, HCLTech, and Cognizant are shifting from traditional billable-hour models to outcome-based pricing as clients demand steep price cuts and greater productivity. The Nifty IT index has fallen by a fifth this year, erasing $73 billion in market value. Contracts are becoming shorter, and some work is moving in-house as clients use AI. Mid-sized firms like Persistent Systems and Coforge are gaining market share with agile, flexible pricing, while large incumbents see subdued growth of 1-3%. TCS has laid off over 12,000 employees, the only major Indian IT firm to do so, and is hunting for AI acquisitions. Some firms, like Mahindra & Mahindra, are avoiding risky pricing guarantees that rivals are offering. The industry's traditional pyramid hiring model is being dismantled as AI reduces the need for entry-level engineers.