India’s leading IT services companies, Tata Consultancy Services (TCS) and Infosys, are trailing significantly behind global giants like Accenture and IBM in the realm of artificial intelligence (AI) projects. According to a report by Information Services Group (ISG), Accenture spearheaded the AI landscape with 2,250 AI-related projects in the 12 months leading up to June 2024. In stark contrast, TCS and Infosys reported only 300 and 200 AI projects, respectively.
Disparity in AI Project Numbers
ISG’s data underscores the competitive edge held by Accenture and IBM, with the latter completing 1,000 AI projects in the same period. The top five were rounded out by CGI (575 AI projects), Cognizant Technology Solutions Corp (450), and Capgemini SE (400). This substantial gap highlights the proactive and aggressive strategies employed by foreign firms in engaging clients and integrating AI into their services.
Early Adoption and Aggressive Positioning
Analysts attribute this disparity to the early adoption and aggressive positioning by companies like Accenture and IBM. Ray Wang, founder of Constellation Research, remarked, “If you were earlier in the cycle selling AI projects, you are converting more deals and you are seeing clients double down on more projects. The global firms got started earlier with clients, hence the head start in project numbers.”
Peter Bendor-Samuel, CEO of Everest Group, added, “The international firms are more aggressive in positioning their deals as AI. There is not a lot of difference in the work that they are doing. The only exception is Accenture, which is better positioned in AI, is investing more, and is more aggressive.”
Impact on Indian IT Firms
Despite the lag, Indian IT firms like TCS and Infosys are not far behind in recognizing the importance of AI. TCS CEO K Krithivasan stated the company is working on 270 AI projects, while Infosys CEO Salil Parekh mentioned 225 GenAI projects at the company’s 43rd annual general meeting. However, the exact revenue generated from these projects remains undisclosed.
The Future of AI in IT Services
The adoption of Generative AI (GenAI) has sparked mixed reactions among industry experts. Optimists view GenAI as a significant opportunity, while others see it as a potential threat to the traditional outsourcing model. Accenture’s impressive performance, securing GenAI orders worth $2 billion in the first nine months of the fiscal year, demonstrates the lucrative potential of AI.
TCS’s Krithivasan cautioned against riding the hype cycle of GenAI, stating, “We tend to overestimate the effect of a technology in the short run and underestimate the impact in the long run. ChatGPT created a lot of early interest. But people are slowly realizing that it is most useful for a class of problems.”
Conclusion
While TCS and Infosys are currently behind in the AI race, their ongoing projects and strategic adjustments may help bridge the gap. With the global IT services sector rapidly evolving, the emphasis on AI will likely intensify, pushing Indian firms to innovate and compete more aggressively in the coming years.
