TCS sets the bar: Merges AI and cloud businesses to form 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 31 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 the banking, retail and healthcare sectors. It closed FY24 with robust revenues of $29.1 billion.

While TCS historically refrained from disclosing revenues for its 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 following its FY24 annual results.

TCS’s decision to disclose its GenAI revenues follows Accenture Plc, led by CEO Julie Sweet, which was the first to announce its GenAI revenues of $600 million for the December-February quarter.

“You have to remember that you can’t just jump to the great data foundation. You need to be in the 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 increasing competitive landscape in the field of 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, via its digital solutions platform, Accenture X.O.

“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 Dublin-headquartered 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 HfS Research, an outsourcing research firm, 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 into the category of being “another low-cost Indian follower” like previous technological innovation waves, he added.

The Mumbai-based IT company’s move to combine its AI and cloud offerings might pave the way for other Indian IT companies to emulate the TCS model.

“AI and cloud depend on each other to be effective, and I expect most providers to follow suit,” added Fersht.

Indian IT majors lack a unified AI and cloud offering. Bengaluru-based Infosys Ltd operates two distinct service lines for its cloud and AI solutions: Infosys Cobalt and Infosys Topaz, respectively. Wipro Ltd manages its AI and cloud offerings through Wipro ai360 and Wipro FullStride Cloud, respectively.