AI revenue upturn at Accenture, TCS cannibalizes future growth

Artificial intelligence (AI) has emerged as the fastest-growing segment for large information technology (IT) services companies, but with a twist.

- Jas Bardia

Experts and industry leaders both say that the red-hot technology is not materially expanding revenues, instead improving efficiency while cannibalising current revenue visibility.

For Accenture Plc, the world's biggest IT services firm, advanced AI revenue more than doubled year-on-year (yo-y) to $1.1 billion, against a 5.95% yo-y rise in quarterly revenue of $18.74 billion in the September-November quarter. Further, AI bookings accounted for 11% of the $20.8 billion in new bookings in the same quarter, more than four times their share two years ago.

Alongside, Tata Consultancy Services (TCS), India’s largest company in the industry, reported a 38% yo-y rise in revenue from AI-led services in constant currency terms to $1.5 billion annualized as of September—compared to 2-9% growth ($9.5 billion revenue) for other new-age services such as cybersecurity, IoT, enterprise solutions, cloud, and interactive. Constant currency does not take currency fluctuations into account.