AI reshapes India's IT services sector contracts as clients demand more for less
Outsourcing giants like Tata Consultancy Services, Infosys, Wipro, HCLTech and Cognizant are rejigging business models, increasingly tying fees to performance outcomes instead of hours worked, as clients demand steep price cuts and more productivity.
Artificial intelligence is transforming India's IT services sector, with customers demanding more value for less. Major players like Tata Consultancy Services (TCS), Infosys, Wipro, HCLTech, and Cognizant are adapting their business models to tie fees to performance outcomes rather than hours worked. Clients are also using AI to perform tasks in-house, leading to shorter contracts and a more level playing field for smaller competitors.
This shift has resulted in a decline in contracts for traditional IT service providers, with the Nifty IT index dropping by a fifth this year. Companies are now focusing on measurable outcomes, with TCS reporting that 80% of their contracts in finance, human resources, and other business services are now based on performance measures.
This performance-based approach has led to some firms making rash decisions, such as Tech Mahindra's reluctance to guarantee prices despite rising chip costs. Despite the challenges, some smaller firms are thriving, with double-digit revenue growth for at least eight quarters in a row.
Written by urgent.news from Economic Times Tech's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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- AI reshapes India's IT services sector contracts as clients demand more for less channelnewsasia.com
- AI reshapes India's IT services sector contracts as clients demand more for less thehindu.com
- AI reshapes India's IT services sector contracts as clients demand more for less economictimes.indiatimes.com
