India’s top IT services firms say clients are increasingly approving technology projects based on return on investment rather than discretionary budgets. Infosys, Tata Consultancy Services (TCS) and HCLTech said artificial intelligence and automation are helping revive modernisation and transformation projects that were earlier put on hold, even as overall demand remains tight.
HCLTech said it delivered revenue growth in the December quarter despite what it described as a constrained demand environment, supported by AI-powered solutions and large-scale transformation programmes.
“I believe there is little value in waiting for either historical or anticipated discretionary spending to resume. Instead, the focus should be on opportunity—identifying proactively where the spending is occurring and targeting those opportunities,” HCLTech CEO C Vijayakumar said during the Q3 press conference.
He added that the company is no longer waiting for discretionary spending to return to levels seen a few years ago or in the post-Covid period.
“Traditional discretionary areas, like SaaS and some of these things, are not where a lot of spend is happening. But spending is happening in what I call day-minus-one work for AI. There is so much capex investment going into data centres, and there are a lot of professional services around that,” he said.
Additionally, Vijayakumar said spending is also happening on robotics and physical AI. “These are the areas—along with semiconductors and silicon for edge inferencing—where we see significant spend. We are really chasing where the money is getting invested.”
Wipro CEO Srini Pallia also said the company is looking to service data centres. “Data centres are a big investment area. If you look at it, every year there is about a billion dollars of capital being spent on infrastructure for AI—whether it is data centres, GPUs and so on. By 2030, it is going to be $3 billion per day,” he said.
He also joked: “And the interesting part is, soon there will be data centres in space. We’ve got to think about that too.”
Infosys said the use of AI-driven software agents has made projects such as legacy modernisation more viable for clients.
“If you take legacy modernisation, and you use software agents along with our expertise and knowledge, the whole economics from a client perspective becomes much better,” Infosys CEO Salil Parekh said during the Q3 earnings press conference. “That allows a lot of these projects, which were not happening before, to start happening.”
The company added that this shift goes beyond changing how existing work is delivered. “This is not a case of something which was being done and is now being done differently,” Parekh said. “This is also a case of something which was not being done and will now start to happen.”
Infosys reported large deal signings worth $4.8 billion during the quarter, up from $3.1 billion in the previous quarter. Management said these deals increasingly combine productivity improvements with cost-optimisation objectives.
TCS also pointed to an increase in short-cycle projects, where decisions are taken faster and are closely linked to measurable returns.
The IT major said this trend is visible across industries, with AI- and data-led programmes driving demand. The company reported annualised AI services revenue of $1.8 billion in the quarter.
“We have now shifted from experiments, POCs and pilots to really ROI-led, scaled implementations,” TCS CEO K Krithivasan said on the Q3 analysts’ call.
On geography, Infosys said demand trends in North America remain stable, although some sectors such as energy and utilities are still recovering. TCS also said clients in North America are showing improved momentum, with faster approval cycles.