‘AI deflation’ comes to India’s tech services giants and puts downward pressure on revenue

The Register · 2 months ago

India's four largest technology services companies—Infosys, HCL, TCS, and Wipro—reported mixed quarterly results, with all experiencing revenue pressure from what they term 'AI deflation,' where AI automation reduces the scope and cost of traditional IT services work. HCL expects annual revenue to decline 3-5 percent next year due to this deflation, while TCS reported 0.5 percent annual revenue decline and all four companies noted margin compression in some deals. The firms are responding by pivoting toward AI-related work such as digital twins, agentic AI solutions, and infrastructure modernization, though they have not implemented major layoffs despite the revenue headwinds.