TCS, Infosys, Wipro at risk as AI threatens India’s IT export engine, Citrini report warns

India’s IT services giants, including Tata Consultancy Services (TCS), Infosys and Wipro face mounting contract cancellations as artificial intelligence erodes the cost advantage that underpinned the country’s outsourcing boom, according to a new report by Citrini Research.

The model, built on providing skilled engineers at lower wages than their Western counterparts, is under threat as AI coding agents perform similar work at marginal cost, according to the report titled "The 2028 Global Intelligence Crisis."

“The entire model was built on one value proposition: Indian developers cost a fraction of their American counterparts,” the report said. But now “the marginal cost of an AI coding agent had collapsed to, essentially, the cost of electricity.”

As a result, cancellations accelerated across the sector, undermining a services industry that generates more than $200 billion annually and is a key contributor to India’s current-account balance.

“TCS, Infosys and Wipro saw contract cancellations accelerate,” the report said, warning that the loss of export revenue could destabilise the currency and external accounts.

The disruption reflects a broader shift in enterprise procurement behaviour. Companies are increasingly considering building software internally using AI tools rather than renewing expensive vendor contracts.

A procurement manager at a Fortune 500 firm described leveraging this possibility during negotiations. After suggesting the company might replace the vendor entirely with AI-assisted development, the contract was renewed at a steep discount.

“They renewed at a 30% discount. That was a good outcome,” the report cited a manager saying.

Such pressures are particularly acute for mid-tier software providers, but even large incumbents are not immune as clients cut staff and therefore software licences.

“The same AI-driven headcount reductions that were boosting margins at their customers were mechanically destroying their own revenue base,” the Citrini report said.

The report warns that the implications extend beyond corporate earnings. India’s IT exports help finance its trade deficit, a sustained decline could weaken the rupee and strain macroeconomic stability.

As services exports weaken in the scenario, the report says the rupee falls 18 percent against the dollar within four months. By the first quarter of 2028, the International Monetary Fund begins what it terms “preliminary discussions” with New Delhi.

While the projections are not forecasts, they highlight the vulnerability of labour-arbitrage business models in an era when automation can substitute directly for skilled professionals.