‘AI deflation’ comes to India’s tech services giants and puts downward pressure on revenue

2026-04-28 · Source: The Register: Enterprise Technology News and Analysis · Field: Business & Management — Consulting & Professional Services, Corporate Strategy & Leadership · Depth: Fundamental Awareness, quick

Summary

India's four major technology services firms—Infosys, HCL, TCS, and Wipro—are experiencing "AI deflation," a downward pressure on revenue despite overall growth. HCL reported 11.2 percent annual revenue growth for FY 2026 but anticipates a three to five percent dip in future revenue due to AI. Infosys expects future deflation but projects continued growth after 3.1 percent revenue growth last year. Wipro saw four percent annual revenue growth but noted lower margins in some deals. TCS experienced a 0.5 percent year-over-year revenue slip, with its CEO acknowledging "degrowth" from AI. Despite these revenue pressures, all companies are actively winning new deals involving AI technology, such as integrating NVIDIA Omniverse-driven digital twins for an electronics manufacturer and modernizing IT infrastructure for a European firm. Headcounts across these companies, each employing over 200,000 people, have largely held steady, avoiding the significant job cuts seen in US tech.

Key takeaway

For entrepreneurs in the tech services sector, recognize that AI's efficiency gains can create "deflationary" pressure on traditional revenue streams. You should focus on developing specialized AI-driven solutions and services, like physical AI integrations or firmware development for AI infrastructure, to capture new market opportunities and maintain growth. Prioritize operational improvements to manage margins as AI reshapes client expectations and project economics.

Key insights

AI deflation is impacting revenue growth for Indian tech services giants, even as they secure new AI-driven deals.

Principles

• AI adoption can lead to revenue deflation.
• AI integration drives new service opportunities.

Method

Tech services firms are productizing agentic AI to integrate into their practices, aiming to improve fixed-price program delivery and offset deflationary pressures.

In practice

• Integrate digital twins with AI for industrial inspection.
• Use in-house AI tools to modernize client IT infrastructure.

Topics

• AI Deflation
• Indian Tech Services
• Revenue Pressure
• Agentic AI
• Digital Twins

Best for: Entrepreneur, Executive, Investor, Tech Journalist

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Editorial summary, takeaway, and curation by AIssential. Original article published by The Register: Enterprise Technology News and Analysis.