TCS signals strategic shift with AI, cloud unit merger
The firm’s move might pave the way for other Indian IT services companies to follow suit.
Tata Consultancy Services Ltd (TCS) has become the first Indian information technology (IT) services company to merge its artificial intelligence (AI) and cloud businesses into one entity, named Ai.cloud.
The merger signals a strategic shift towards innovation and client-centricity, allowing TCS to seize emerging opportunities in the digital transformation landscape. Siva Ganesan, a TCS veteran who oversaw the company’s Microsoft business unit, will spearhead the Ai.cloud unit.
While TCS traditionally provided cloud services through a centralized approach, tailoring IT solutions for various industries, this integration, completed in the fiscal year ended March, marks a significant change in its operational structure.
The consolidation aims to improve efficiency and streamline operations, offering clients a seamless integration of AI and cloud solutions under one banner, instead of maintaining smaller teams, catering to individual clients.
TCS, a key player in the global IT industry, serves Fortune 500 companies in banking, healthcare and retail sectors. It closed FY24 with robust revenues of $29.1 billion.
While TCS historically refrained from disclosing revenues for cloud or AI initiatives, recognizing the growing importance of data and cloud for its generative AI (GENAI) business, chief executive officer (CEO) K. Krithivasan decided to reveal that the company’s GENAI pipeline had doubled to $900 million from a year ago in the quarter ended March.
“Cloud adoption is a catalyst for innovation, and a strategy for business and growth. It provides the unifying digital fabric that forms the foundation for a connected future—one that continues to unfold with each technological advancement, including GENAI,” Krithivasan had said in a letter to shareholders after its FY24 annual results.
TCS’S decision to disclose its GENAI
THE consolidation aims to improve efficiency and streamline operations
SIVA Ganesan, who oversaw TCS’S Microsoft business unit, will spearhead the Ai.cloud unit
revenues follows Accenture Plc, led by CEO Julie Sweet, which was the first to announce GENAI revenues of $600 million for the December-february quarter. “You have to remember that you can not just jump to the great data foundation. You need to be in Cloud. You’ve got to have modern platforms,”
Sweet said during a post-conference analyst call after announcing the results for its financial second quarter.
While such disclosures underscore the proactive commitment to transparency of leading IT services firms, it also points to the growing competitive
TCS’S GENAI pipeline had doubled to
$900 million from a year ago in the
March quarter
THE IT services firm serves Fortune 500 companies in the banking, healthcare and retail sectors
landscape in emerging technologies.
In May 2019, Mint had reported that Accenture, which earns twice as much as TCS in annual revenues, had taken a swipe at TCS’S digital offerings under Business 4.0. “Stop playing catch-up and start applying digital at the core of your business to reinvent for a new era of industry. Go beyond Industry 4.0: If you think Industry 4.0 is the epitome of industrial digitization—think again. The fact is the very notion of the industry itself is evolving,” according to a post on the official website of Dublinheadquartered Accenture XO.
“TCS clearly wants to ensure it provides Global 2000 enterprises with a serious alternative to Accenture in Cloud, AI data and strategy areas, and not just large, low-cost outsourcing," said Phil Fersht, CEO of Us-based outsourcing research firm HFS Research, in an emailed response to Mint’s queries.
”With the oncoming AI wave, Krithivasan and his team clearly want to move faster to lead with Accenture, and not fall in the category of “another lowcost Indian follower” like past technological innovation waves, he added.
TCS’S move might pave the way for other Indian IT firms to follow suit.