TCS says AI won't replace outsourcing, plans 8,900 specialised engineering roles

Artificial intelligence has triggered widespread debate over the future of India's multi-billion-dollar IT services industry, with investors questioning whether automation will reduce the need for large engineering teams. Tata Consultancy Services (TCS), however, is taking a different view. Rather than preparing for a shrinking outsourcing market, India's largest software services company is investing in new AI-focused roles and considering acquisitions that it believes will strengthen its long-term position.

The company plans to significantly expand its pool of forward-deployed engineers (FDEs), specialists who work directly with customers to help implement and customise AI systems. At the same time, TCS is evaluating acquisition opportunities in areas including artificial intelligence, cybersecurity and data security, marking a notable shift for a company that has traditionally relied on organic growth.

More from Tech

TCS bets on AI services, not AI disruption

Speaking to Reuters, TCS Chief Executive K Krithivasan said the company wants between 1 and 1.5 per cent of its workforce to operate as forward-deployed engineers. Based on the company's headcount at the end of June, that would translate to roughly 5,900 to 8,900 employees.

Krithivasan did not specify whether these roles would be filled through fresh hiring or by retraining existing employees. However, the scale of the initiative underlines TCS's belief that customer-facing AI expertise will become increasingly important as enterprises move beyond experimenting with generative AI and begin integrating it into core business operations.

Forward-deployed engineers have emerged as one of the fastest-growing roles in the AI industry. Unlike traditional consultants, these specialists work closely with clients to deploy AI models, integrate them with existing technology infrastructure and tailor solutions to specific business requirements. Several leading AI companies, including OpenAI, Anthropic and Microsoft, have expanded hiring for similar positions as enterprise demand for AI implementation continues to grow.

Krithivasan argued that the rise of AI does not diminish the value of outsourcing firms. Instead, he believes organisations will require experienced technology partners to connect AI models with existing systems and ensure they function effectively within complex enterprise environments.

"What you need is a deep knowledge of the customer environment to make it work. That is where we differentiate ourselves. This has nothing to do with cost arbitrage. It's essentially because of the talent pool that we have built," he told Reuters.

Acquisitions back on the agenda

Alongside expanding its AI workforce, TCS is also reassessing its acquisition strategy. After years of favouring internal growth over major deals, the company is now exploring potential acquisitions that could strengthen its capabilities in AI-related technologies and cybersecurity.

Chief Financial Officer Samir Seksaria told Reuters that the company is evaluating opportunities that align with its long-term strategic priorities rather than pursuing acquisitions simply for expansion.

"We are looking at where we can find things which will help us enable or enhance our strategic positioning," Seksaria said.

The renewed focus on acquisitions comes as competition in enterprise AI intensifies. Global technology companies and specialised AI firms are investing heavily in platforms, infrastructure and security solutions as businesses accelerate AI adoption across industries.

Despite its confidence in the long-term opportunity, TCS has also acknowledged that AI-driven growth is unlikely to be smooth. The company's annualised AI revenue growth slowed to 13 per cent during the first quarter, down from 28 per cent in the previous quarter.

Krithivasan said he would like AI-related revenue to expand by around 25 per cent quarter-on-quarter over the long term but cautioned that growth would not follow a straight line.

The strategy reflects a broader shift taking place across India's $315 billion IT services sector. As AI improves productivity and changes the way software projects are delivered, technology firms are increasingly repositioning themselves as partners that help enterprises deploy, integrate and manage AI systems rather than simply supplying engineering talent.

For TCS, that means investing in specialised expertise while selectively expanding through acquisitions — a combination the company believes will allow it to benefit from AI's rapid adoption rather than be disrupted by it.