India's IT services sector experienced significant volatility in late 2024 when Agentic AI reached a critical milestone, seemingly capable of performing core IT functions such as coding, software testing, and technology operations. According to reports from Business Standard, India's Nifty IT index fell more than a third during this period, while global technology services companies including Accenture, SAP, and Salesforce saw shares plummet. However, the sector has demonstrated resilience with margins holding steady and revenues continuing to grow, while the deal pipeline remains stronger than ever. As Ares Management Corporation CEO Michael Arougheti explains, "Any time there's a material disruption in any industry, there's always two sides of the coin. We could see more investment opportunities in opportunistic credit and secondaries, and an acceleration in AI adoption should drive digital infrastructure opportunities."
TCS has achieved an annualised AI revenue run-rate of $2.5 billion in the last quarter of fiscal 2026, growing at a compound annual growth rate of more than 22% over the past four years. According to CNBC TV18, Tata Sons Chairman N Chandrasekaran announced that "I predict that over the next three years, TCS will have as many AI agents as human employees." Speaking at TCS's 31st Annual General Meeting, Chandrasekaran emphasized that "AI is not merely a technology. It is infrastructure — an infrastructure of intelligence," adding that as the cost of intelligence falls, more business processes, decisions and customer interactions will become candidates for AI-driven transformation. The company reported consolidated revenue of ₹2.67 lakh crore for fiscal 2026, up 4.6% year-on-year, while net profit rose 8.8% to ₹52,820 crore, with total contract value exceeding $40.7 billion during the year. CEO and MD K Krithivasan revealed that TCS has delivered more than 5,000 AI engagements across industries, with 95% of enterprises currently in the early stage of their AI journey.
TCS Chairman N Chandrasekaran announced a fundamental shift in hiring practices as AI agents become integral to the workforce. Speaking at TCS's 31st Annual General Meeting, he stated that "The company will not be hiring the kind of numbers it used to hire." He projected that "if the company has half a million employees, the day is not far when the company will have half a million AI agents." This transformation reflects the reality that AI agents are becoming a new category of workers within IT services firms, with the number of agents potentially matching human employees in the near future. New roles are emerging including agent engineers, AI governance specialists, AI transformation advisors, and AI assurance partners, all requiring combined deep technical skills and domain knowledge at global enterprise scale. The company is currently working with clients across industries to build AI platforms and integrate AI capabilities into business processes, with TCS also launching sovereign AI infrastructure for India.
The workforce transformation extends beyond TCS, with AI cited as a reason for 87,714 job losses this year, accounting for 22% of all layoffs in 2026 according to Layoffs.fyi. This figure already tops the 54,836 roles the technology displaced throughout 2025. As one of the country's biggest private employers, India's $315 billion IT sector has already pared back hiring, with geopolitical turbulence further weakening client demand. TCS itself has implemented significant workforce adjustments, cutting more than 12,000 jobs last July and experiencing net headcount fall of over 23,000 in fiscal year ended March 2026. However, Chandrasekaran emphasized that "Some of the work being done will go to AI agents. That will be the nature of the transition that we have to go through not only as a company, as an industry, and as a country." He clarified that "We do not plan to cut staff but will hire fewer."
Chandrasekaran identified five major growth areas for IT services firms in the AI-driven era: modernising legacy technology systems, redesigning business processes around AI, governing AI agents, building sovereign AI infrastructure, and deploying AI in physical environments such as factories, warehouses and supply chains. According to The Times of India, he emphasized that "AI does more than reduce effort. It is an infrastructure of intelligence." He rejected concerns about AI diminishing the industry's long-term prospects, stating that "Once the transition happens, the AI world will produce many more opportunities. There will be new talent that will be required." He clarified that "Some of the work being done today will go to AI agents. That will be the nature of the transition that we have to go through not only as a company, but as an industry and as a country. We need to build a lot of AI skills so people can be gainfully employed."
