{
  "id": 2293622,
  "title": "AI reshapes India's IT services sector contracts as clients demand more for less",
  "url": "https://urgent.news/2026/08/21/ai-reshapes-indias-it-services-sector-contracts-as-clients-demand-2293622",
  "topic": "ai",
  "section": "AI",
  "published": "2026-08-21T03:57:15.000Z",
  "source": {
    "name": "The Hindu",
    "slug": "the-hindu",
    "url": "https://www.thehindu.com/sci-tech/technology/ai-reshapes-indias-it-services-sector-contracts-as-clients-demand-more-for-less/article71372064.ece"
  },
  "original_language": "en",
  "account": "India's IT services sector is undergoing a transformation driven by the rapid adoption of artificial intelligence (AI). Outsourcing giants such as Tata Consultancy Services (TCS), Infosys, Wipro, HCLTech, and Cognizant are reshaping their business models to align with clients' demands for lower costs and higher productivity. Instead of charging based on the number of hours worked, these companies are tying their fees to performance outcomes. This shift has led to shorter contracts and reduced reliance on the traditional scale of employee numbers to win business, leveling the playing field for smaller competitors who have seized opportunities to snatch work.\n\nIndustry executives acknowledge that clients are demanding more for less, seeking the same work at 25% to 30% lower rates while expecting faster delivery and greater efficiency. In response, several IT firms have started basing contract pricing on measurable outcomes. For instance, TCS Chief Executive K Krithivasan reported that around 80% of the company's contracts in the finance, human resources, and other business services segments are now performance-based. Similarly, Cognizant recently entered into an AI and automation deal with Daimler Truck, where AI-related cost savings would be shared between the vendor and the client.\n\nAI is not only reshaping pricing models but also driving productivity gains. Clients are increasingly vocal about requesting the same work for reduced prices, with Persistent Software CEO Sandeep Kalra noting that clients are demanding 25% to 30% less for the same work, alongside faster delivery and higher productivity. However, this productivity boost has also intensified competition, as mid-sized firms have become more agile and attractive to customers due to their ability to quickly deploy senior leaders and offer flexible pricing. As a result, larger traditional players like TCS, Infosys, Wipro, and HCLTech have experienced subdued growth, with revenue increases ranging from 1% to 3% compared to double-digit growth for smaller firms such as Persistent and Coforge.\n\nDespite these challenges, some companies have chosen to take risks by factoring in productivity gains over the long term and guaranteeing prices despite rising chip costs. However, others like Tech Mahindra CEO Mohit Joshi caution against rash decisions, as many rivals are making similar risky moves. Infosys has recently walked away from contracts that are no longer economically viable, and TCS is boosting its numbers of engineers embedded with clients to accelerate AI adoption and hunting for AI acquisitions. The company has also implemented mass layoffs in the AI era, but some observers argue that the traditional role of these IT giants as massive recruiters may be winding down.",
  "summary": "Tata Consultancy Services, Infosys, Wipro, HCLTech and Cognizant are rejigging business models, increasingly tying fees to performance outcomes instead of hours worked",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 4,
    "also_reported_by": [
      {
        "outlet": "Channel News Asia",
        "title": "AI reshapes India's IT services sector contracts as clients demand more for less",
        "url": "https://urgent.news/2026/08/20/ai-reshapes-indias-it-services-sector-contracts-as-clients-demand",
        "published": "2026-08-20T23:02:47.000Z"
      },
      {
        "outlet": "Economic Times Tech",
        "title": "AI reshapes India's IT services sector contracts as clients demand more for less",
        "url": "https://urgent.news/2026/08/21/ai-reshapes-indias-it-services-sector-contracts-as-clients-demand",
        "published": "2026-08-21T02:54:06.000Z"
      },
      {
        "outlet": "The Hindu - Sci-Tech",
        "title": "AI reshapes India's IT services sector contracts as clients demand more for less",
        "url": "https://urgent.news/2026/08/21/ai-reshapes-indias-it-services-sector-contracts-as-clients-demand-2296733",
        "published": "2026-08-21T03:57:15.000Z"
      }
    ]
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}