TCS Bets on AI Expansion with New Engineering Team and Acquisition Strategy

Jul 13, 2026 12:20

Amid growing concerns that artificial intelligence could disrupt India's $315 billion IT and outsourcing industry, Tata Consultancy Services (TCS) is pursuing a different strategy. Rather than treating AI as a threat, India's largest software services company plans to use it as a driver of future growth by building a dedicated team of up to 8,900 Forward-Deployed Engineers (FDEs) and exploring acquisitions of AI startups.

In an interview with Reuters, two senior TCS executives outlined the company's AI-focused expansion plans.

TCS Plans Dedicated AI Engineering Workforce

Many investors fear that AI will reduce demand for software engineers, shorten project timelines, and push clients to negotiate lower service fees due to increased productivity.

Rejecting that view, TCS Chief Executive Officer K. Krithivasan said:

"We want to ensure that around 1% to 1.5% of our workforce can function as Forward-Deployed Engineers."

Based on TCS's workforce at the end of June 2026, this translates to approximately 5,900 to 8,900 employees. However, Krithivasan did not specify whether the company would hire externally or retrain existing employees for these specialized roles.

What Are Forward-Deployed Engineers?

Forward-Deployed Engineers work directly with client organizations, helping them integrate AI into their business operations and design AI systems tailored to their specific needs.

Although AI may reduce demand for some traditional IT roles, FDEs have emerged as one of the fastest-growing positions in the global AI industry.

Through this initiative, TCS is positioning itself to compete more directly with companies such as OpenAI, Anthropic, and Microsoft, all of which have been expanding similar customer-facing AI engineering teams.

AI Startup Acquisitions Under Evaluation

The Mumbai-based technology giant is also evaluating acquisitions in the fields of:

Artificial intelligence
Data security
Cybersecurity

Historically, TCS relied primarily on organic growth and avoided major acquisitions during 2023 and 2024. However, since late 2025, the company has shifted its strategy toward acquiring promising AI-focused startups.

Chief Financial Officer Sameer Seksaria said:

"We are looking for opportunities that will strengthen and enhance our strategic positioning."

AI Is an Opportunity, Not a Threat

Krithivasan dismissed concerns that AI will eliminate the outsourcing business model.

He argued that enterprises will still require experienced technology partners like TCS to deploy, integrate, and manage AI systems within their existing IT environments.

"Making AI work effectively requires deep knowledge of the customer's existing environment. That's where we differentiate ourselves. This isn't about cheap labor or cost arbitrage—it's about the strength of the highly skilled workforce we've built."

He added that organizations are increasingly using multiple AI models rather than relying on a single provider, creating greater demand for system integration, data management, and AI implementation expertise.

AI Revenue Growth Slows

Despite its long-term optimism, TCS reported slower AI revenue growth during the first quarter of the year.

Annual AI revenue growth declined to 13%, down from 28% in the previous quarter.

Krithivasan said the company aims to achieve around 25% quarterly AI revenue growth over the long term, while acknowledging that growth is unlikely to follow a perfectly linear path.

Investing $1 Billion Annually in AI

According to CFO Sameer Seksaria, TCS is investing approximately $1 billion every year to improve employee skills and expand AI capabilities across the company.

The investment is focused on: