I t was 1971, four years after it had been set up, that a small Tata Group company won its first overseas contract from an electric fan manufacturer in Iran. Two years later, the company teamed up with the American firm Burroughs Computer to market its systems in India and develop software for them.
In 1974, it delivered a financial accounting solution for a housing society in the United Kingdom, considered the first full software development lifecycle project. By 1976, the company had crossed $1 million in revenue.
That pioneering startup was Tata Consultancy Services (TCS). Founder Fakir Chand Kohli and his small team of engineers built a company that crossed $30 billion in annual revenue in the last fiscal year.
Soon, others followed. In 1976, Shiv Nadar founded Hindustan Computers Ltd and built India’s first microprocessor-based computer. Azim Premji’s Wipro, a vegetable oil manufacturer, entered information technology in 1977.
In 1981, N.R. Narayana Murthy and six engineers founded Infosys with a modest $250, a company credited with championing the global delivery model and creating some of India’s first salaried millionaires.
These companies emerged when India was a closed economy, burdened by high import duties, taxes, and the licence-permit raj. Their success is remarkable given that software exporters were not yet recognised as an “industry” then and were denied bank finance.
Nearly six decades after those humble beginnings, the Indian IT industry now stands at a crossroads. As Krishna Gopalan reports, Artificial Intelligence (AI) has emerged as both an opportunity and a reckoning for the sector. Revenue growth has slowed to around 5%, with profits growing at just 7% since 2022. Routine coding and support roles are disappearing as AI takes hold, forcing companies to rethink their hiring models and shrink their workforce. The companies are responding. TCS plans to invest up to $7 billion in AI-driven data infrastructure, while Infosys is reimagining service delivery through AI. Wipro, meanwhile, is betting $1 billion on embedding AI across all its platforms. Yet challenges abound—Global Capability Centres of MNCs are capturing high-value work that once went to Indian IT giants and intensifying competition for skilled talent.
This great reset is unfolding against a complex macroeconomic backdrop. Business confidence in India rose modestly in the second quarter (July–September), with the index at 50.6, marginally above the previous quarter. As Surabhi notes, despite an uptick, business confidence remains significantly lower than the nine-year high of 56.7 in the second quarter of the previous financial year. While tax cuts have spurred festive demand and boosted sales, long-term sustainability remains uncertain.
As the world shifts from software outsourcing to ‘intelligence outsourcing’, India’s information technology sector must reboot and reinvent itself. Its future lies in creating business models that rise above the constraints of visa regulations and the pressures of quarterly reporting.
@szarabi
