India’s largest software services firm is expanding client-embedded AI talent and pursuing deals after its $700 million Coastal Cloud acquisition, as annualised AI revenue growth slowed to 13% in the first quarter.
Tata Consultancy Services is building a team equal to 1% to 1.5% of its associates, or roughly 5,900 to 8,900 employees based on end-June headcount, to work as forward-deployed engineers embedded with clients on AI rollouts. CEO K Krithivasan told Reuters the company is also evaluating acquisitions in AI, data security and cybersecurity, while CFO Samir Seksaria said the goal is to find assets that improve TCS’s strategic positioning. The move comes as investors worry AI could unsettle India’s $315 billion IT services industry by shrinking engineering team sizes, compressing project timelines and pressuring pricing. Krithivasan argued AI will not undermine the outsourcing model because customers still need partners with deep knowledge of their environments to integrate multiple AI models, connect them to existing systems and manage data flows. TCS’s annualised AI revenue growth slowed to 13% in the first quarter from 28% in the previous quarter, though Krithivasan said he wants the business to grow about 25% quarter-on-quarter over the long term and does not expect a linear path. TCS’s annualised AI revenue stands at $1.5 billion, and its acquisition push marks a break from a long preference for organic growth after the company completed its $700 million purchase of US-based Salesforce consulting firm Coastal Cloud in December 2025.