India IT services companies reported growing artificial intelligence revenue in the second quarter of fiscal 2027, but analysts say the sector has yet to enter a broad-based growth cycle as clients focus on cost savings and measurable returns.

AI revenue grows across India IT services firms

HCLTech reported $219 million in advanced AI revenue, up 28.4% quarter on quarter and 78% year on year in constant currency. That outpaced its overall constant-currency revenue growth of 2.3% and 2.6%, respectively.

TCS said its annualised AI revenue reached $3.1 billion, representing more than 10% of total revenue. AI contributed 10.5% of Infosys revenue.

Neovay Global CEO and managing director Praveen Bhadada said Infosys’ AI revenue rose by more than $120 million during the quarter, while total revenue rose by about $63 million. He said the figures indicated a contraction in traditional work as AI replaces some services while adding others.

Productivity gains complicate the growth picture

Clients are signing large, long-term contracts focused on cost savings and productivity, Bhadada said. He added that firms are earning more revenue per employee, hiring cautiously and protecting margins through efficiency.

Gartner senior principal analyst Biswajit Maity said AI use is shifting from experimentation to scaled deployment across service delivery, operations, software engineering and business transformation. Buyers remain focused on productivity, business outcomes and commercial flexibility, he said.

Forrester principal analyst Biswajeet Mahapatra said it remains difficult to separate genuinely new AI spending from technology budgets redirected toward AI-enabled programmes. AI can generate transformation revenue while reducing revenue from labour-intensive traditional services, he said. For now, the clearer evidence is of AI demand and productivity gains rather than an acceleration in aggregate industry revenue.

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