Indian information technology companies are experiencing a small uptick in outcome-based pricing deals, marking a fundamental shift away from traditional time and material (T&M) and fixed price models. According to reports from Business Standard, this transformation is being driven by artificial intelligence (AI) changing how new engagements are structured. Outcome-based pricing moves from input to output metrics, with clients paying strictly for actual usage or delivered results rather than service provider effort typically billed by daily hours or overall project time.
Tata Consultancy Services (TCS) reported that its client engagement models span multiple horizons including output commitment-based, outcome-based, fixed-price, and T&M models. As reported by Business Standard, TCS Chief Operating Officer Aarthi Subramanian told analysts that the company is seeing a lot more shift to outcome-based commitment, especially in agentic GBS, this quarter. For Coforge, outcome-based contracts comprise about 6-7 per cent of its total revenue on a run-rate basis, while Cognizant has 45 per cent of its business process outsourcing (BPO) contracts now being signed under outcome-based commercial models.
According to HfS Research president Saurabh Gupta, new AI deals feature hybrid pricing models consisting of subscription, consumption, and outcomes. As reported by Business Standard, if 80 per cent of a deal is done by a platform or tool, there will be a subscription cost, consumption cost measured in tokens or AI agents' time, and performance-based outcomes. Tech Mahindra recently won a healthcare segment deal where the commercial model is tied to measurable outcomes including 40 per cent fewer tickets, 20 per cent lower mean time to resolution, and 30-35 per cent reduction in technical debt.
The AI agent revolution is creating significant challenges for traditional enterprise software companies built around human users. As Salesforce co-founder Parker Harris framed it: "Why should you ever log into Salesforce again?" The company launched Headless 360 in April, exposing every Salesforce capability as APIs so AI agents can access data without human intervention. Enterprise software companies face a fundamental shift as AI agents become capable of retrieving information, making decisions and executing workflows on behalf of employees, fundamentally changing the business model that relied on seat-based pricing for decades. According to Yoav Kolodner, CEO of Tribal and former VP of engineering at Salesforce, "The platforms and systems of record are not losing value here." The more immediate problem for public enterprise software companies is what happens to revenue as the industry has run on seat-based pricing for years, but if AI agents take over tasks that previously required several employees, the relationship between usage and license count gets harder to justify.
