India’s second-largest software services exporter, Infosys, said on Tuesday that artificial intelligence services accounted for 5.5% of its revenue in the December quarter, the first time the company has formally disclosed the contribution of its AI business.
The disclosure comes at a sensitive moment for India’s $283 billion IT services industry, which is confronting mounting investor concern that generative AI and autonomous systems could reshape — or erode — its traditional labor-intensive outsourcing model.
Infosys posted third-quarter revenue of 454.79 billion rupees ($5.01 billion), meaning AI-related work is now a measurable and growing revenue stream within the company’s portfolio.
Register for Tekedia Mini-MBA edition 19 (Feb 9 – May 2, 2026).
Register for Tekedia AI in Business Masterclass.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab.
Chief Executive Salil Parekh said the AI segment is “growing at a robust pace,” adding that its offerings include autonomous agents and embedded AI systems designed for physical devices and hardware environments. Parekh has previously stated that Infosys is working on 4,600 AI projects and has developed more than 500 AI agents.
Industry Under Pressure from AI Acceleration
The timing of the revenue breakout is of importance. Indian IT stocks have suffered their worst weekly decline in more than 10 months, amid fears that rapid advances in generative AI, particularly tools from companies such as Anthropic, could compress demand for traditional application maintenance, coding, and back-office services.
The recent sell-off has erased roughly $40 billion from the sector’s market capitalization so far in February, reflecting anxiety that automation could reduce billable headcount — the backbone of India’s outsourcing model for decades.
The core business model of Indian IT majors has historically depended on scale: deploying large pools of engineers to manage enterprise systems, modernize legacy infrastructure, and provide long-term support services. AI-driven automation threatens to alter pricing dynamics by reducing manual effort and accelerating software development cycles.
By quantifying AI revenue, Infosys appears to be signaling that it is not merely exposed to disruption but actively participating in the shift.
Competitive Positioning: Infosys vs. Peers
Infosys’ AI revenue share of 5.5% places it broadly in line with larger rival Tata Consultancy Services, which has said its AI services generate approximately $1.8 billion annually, or around 5.8% of total revenue.
The figures suggest that while AI remains a minority contributor today, it is no longer peripheral. For investors, the key question is not only how fast AI revenue grows, but whether it can offset potential declines in legacy service lines.
Margin dynamics will also be closely watched. AI projects often command higher value-add but can require significant upfront investment in platforms, training, and partnerships.
Infosys on Tuesday also announced a collaboration with Anthropic to establish a dedicated center focused on building and deploying AI agents. The initiative will begin in the telecom sector before expanding into financial services, manufacturing, and software development.
The emphasis on “agents”, AI systems capable of autonomous task execution, reflects a broader industry pivot from chatbot-style interfaces toward workflow automation and decision-support systems embedded within enterprise environments.
By aligning with a frontier AI lab such as Anthropic, Infosys is positioning itself as an integrator of advanced models into enterprise-grade solutions, rather than attempting to build foundational models in-house.
Structural Implications for India’s IT Model
The evolution toward AI-led services raises deeper structural questions for India’s technology sector.
If AI tools significantly reduce coding and maintenance hours, traditional pricing structures based on effort and staffing may face compression. Companies will need to shift toward outcome-based pricing, platform-driven services, and domain-specific AI solutions.
At the same time, India’s large engineering talent pool and long-standing global client relationships could prove advantageous in the AI transition. Rather than displacing Indian IT firms, AI may accelerate their move up the value chain — from labor arbitrage to AI-enabled digital transformation.
Infosys’ announcement comes as India hosts the AI Impact Summit in New Delhi from February 16–20, highlighting the country’s ambition to play a larger role in shaping global AI development and deployment.
The summit underscores a broader narrative: India is not only a consumer of AI technologies but increasingly a deployment hub, systems integrator, and engineering center for global enterprises adopting AI at scale.
For Infosys and its peers, the coming quarters will test whether AI becomes a margin-enhancing growth engine — or a disruptive force that compels painful restructuring. However, the 5.5% figure, modest on the surface, signals that the transition is already underway.