Tata Consultancy Services Consolidates AI Capabilities into New Business Unit

TLDRs;

• TCS creates a new AI and services transformation unit to consolidate capabilities and expand AI-powered client solutions.
• Amit Kapur, a 20-year TCS veteran, will lead the division, starting in September 2025.
• Indian IT firms favor partnerships and restructuring over acquisitions to drive AI growth amid subdued client spending.
• Rising automation and global uncertainty push Indian IT giants to bet heavily on AI-led transformation strategies.

Tata Consultancy Services (TCS), India’s largest IT services provider, has announced the creation of a new business unit dedicated to artificial intelligence (AI) and services transformation.

The strategic move, confirmed in a company memo seen by Reuters, is aimed at consolidating TCS’s existing AI capabilities and expanding its portfolio of AI-based solutions for clients worldwide.

The new division will be led by Amit Kapur, a veteran executive with over two decades at TCS. Kapur, who previously managed the company’s UK and Ireland business, is scheduled to assume leadership of the AI unit in September. His appointment underscores TCS’s preference for leveraging internal expertise rather than external hires to spearhead strategic growth areas.

TCS bets big on AI-led future

The launch of this AI-focused business unit marks a turning point for the Indian IT industry. TCS becomes the first Indian IT firm to establish a fully dedicated AI division, mirroring similar restructuring by a U.S. competitor earlier this year.

Unlike global firms that have leaned heavily on acquisitions to accelerate AI growth, Indian players are taking a more measured route. In 2024 alone, Indian IT companies engaged in about 46 AI-related partnerships with hyperscalers and startups.

Analysts suggest that this collaboration-driven model helps firms like TCS scale AI offerings without the significant financial burden of acquisitions.

Pressure from slowing client spending

TCS’s reorganization also reflects the mounting challenges in the $283 billion Indian outsourcing sector. Global economic uncertainties and tighter client budgets have led to subdued IT spending, with many firms cutting costs and hesitating to expand traditional outsourcing deals.

At the same time, AI threatens to disrupt established business models. Tasks once handled by large pools of IT professionals are increasingly being automated. This has placed added urgency on companies like TCS to reinvent themselves and stay competitive in a rapidly evolving landscape.

Industry analyst Pareekh Jain emphasized that AI transformation is now seen as “the only major lever for growth” amid weak market conditions. For TCS, consolidating AI into a standalone business unit represents not just an opportunity, but a survival strategy.

Leveraging expertise for global impact

By promoting Kapur to lead the initiative, TCS is signaling confidence in homegrown leadership to guide its AI ambitions. His experience in leading large-scale international operations positions him well to oversee the integration of AI into client offerings across multiple geographies.

The timing of the move also aligns with wider industry momentum. Surveys indicate that 93% of Indian corporations plan to increase AI investments in 2025, while nearly 90% have already launched more than 10 AI pilot projects in 2024. By consolidating its capabilities under a single unit, TCS is positioning itself to better capture this growing demand.

While challenges remain, TCS’s new AI business unit represents a decisive step in reshaping its identity from a traditional outsourcing giant to a global technology innovator.

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