TCS annualised AI revenue at $1.5 billion, says CEO K Krithivasan

TCS has disclosed for the first time that its annualised AI revenue is about $1.5 billion, as investors seek clarity on returns from large AI investments across IT services firms

Tata Consultancy Services (TCS) said its annualised revenue from artificial intelligence (AI) was about $1.5 billion and growing 16.3 per cent sequentially, the first time that India’s largest IT services company disclosed a metric as investors are keen to know the returns on investment (RoI) when firms are pouring in billions into the ecosystem.

 

As of March this year, the total revenue of TCS was $30.2 billion.

 

Indian IT companies have said AI is a part of every deal discussion and it is baked into renewals to improve efficiency and productivity for clients. However, they have not been forthcoming in disclosing the revenue generated from the latest technology that is expected to upend business process and productivity.

 

“We are trying to help accelerate AI adoption in customers, adapt AI at scale, and anchor AI in their strategy and business value. AI is a lever that has to be embedded in strategy, else it will not give any value,” Chief Executive Officer (CEO) K Krithivasan said at the company’s analyst day.

 

TCS is engaged in more than 5,000 engagements till date and 54 of its top 60 clients, who generate annual revenue of more than $100 million, have some AI projects with it. Around 85 per cent of the customers, who provide revenue of over $20 million, use TCS AI solutions.

 

Smaller rival HCL Tech said in October that its revenue from advance AI is now more than $100 million, representing three per cent of its top line, becoming the first Indian IT services company to come out with that metric.

 

Accenture, on the other hand, regularly makes its revenue public and deal pipeline from generative AI (Gen AI). For the financial year ending August 31, Accenture’s advanced AI revenue tripled to $2.7 billion, while Gen AI bookings nearly doubled to $5.9 billion, showing significant growth driven by enterprise demand for AI adoption.

 

And yet, companies are struggling for the right adoption of AI because of the quality of data within an enterprise. While ChatGPT exploded in the scene three years ago, and people have used it and other tools to simplify routine work, enterprises are finding it difficult to realise meaningful returns on their AI investments.

 

“There is an RoI uncertainty. We can do few projects as experimentation, few proof of concepts (PoCs) but enterprises have to get the RoI benefits and that is the kind of projects we do, based on years of customer experience and moving up the value chain,” Krithivasan added.

 

TCS is also training its sales and presales personnel in AI skills with 180,000 employees having higher coding skills. “We are driving an AI-first culture for every project, which means what one can do with AI here even if it cannibalises our revenue. It is giving AI the first right of refusal.”