LEANER AI

India's IT Giants Are Betting On Gen Al To Modernize Enterprises While Cutting Headcount And Protecting Margins

- 

Generative Al sparked off a new tech cycle in IT services, becoming a major driver of growth in 2025.

“Most enterprises are now aware that Al isn’t an add-on, but a foundational capability that will be critical for future growth and competitiveness,” observed ISG, a global technology research and advisory firm, in an early October note.

In the past year, Indian IT services’ largest companies have been alert to the immediate opportunity in existing and large customer accounts: enterprise modernization. Simply put, clients’ in-house systems have a lot of data stored in different formats and obsolete processes. So, IT companies are looking to modernize the clients’ systems to make the enterprises ready to harness Gen Al tools.

“A lot of customers are looking at modernization,” C Vijayakumar, CEO and Managing Director of HCL Technologies, told research analysts at the company’s earnings call for the second quarter of fiscal year 2026 (Q2 FY26) on 13th October.

“Enterprise modernization is additive in terms of overall revenue for the industry,” he added. While Gen Al is a tailwind for modernization, this stream is independent of HCLTech’s Advanced Al revenue.

Industry leader TCS, which generated $30 billion in FY25 revenue, also called out ‘Al-powered modernization’ as a huge opportunity, especially in the banking, financial services, and insurance (BFSI) industry. In FY25, the BFSI sector contributed 37% to TCS’ total revenue.

“Many of our global customers have a lot of technology debt that they have carried over the years,” said Aarthi Subramanian, Executive Director, President and COO of TCS, at the company’s Q2-FY26 earnings call. To address the tech debt, TCS will use GenAl and Agentic Al as powerful tools to understand the legacy code and deliver the new code, she added. “We are seeing an uptick across customers, significantly in BFSI, and expect to replicate this across other verticals,” she said.