Moving up the value chain, TCS sets up AI offices for clients

IT major Tata Consultancy Services (TCS) has been bagging contracts for setting up AI (artificial intelligence) offices for clients, with deal sizes in the $10 million to $30 million range, a top executive said at a recent earnings call.

K Krithivasan, chief executive officer and managing director, said at the company’s Q2 earnings call that many of the GenAI (generative AI) engagements tend to be small, “but we do also get some large projects”.

Citing an example, he said TCS established an AI office which was a program that checks the overall architecture, (fills the) guardrails, ensures the risk and regulatory (legal) frameworks, looks at all potential POCs (proofs of concept), and evaluates the POCs and does other related things.

“Such projects will be more long tenured and value could be higher. If you are doing one single POC or one single program, the value mayn’t be very high. But where it is a long-term project, the value could be high”, Krithivasan said.

“These AI offices try to create an overall infrastructure. It’s both the technical infrastructure as well as the framework and guardrail that we require”, he said, adding that for such projects, the deal value varies based on the tenure of the deal and the size of the organisation, and could range between $10 million to $30 million.

TCS said it has more than 600 AI and GenAI engagements deployed successfully in production or in various phases of development. Almost 86 engagements went into production in the recently concluded quarter, it said.

Last quarter, the Mumbai-headquartered firm disclosed that it was handling more than 270 AI/GenAI engagements. TCS had said its AI and GenAI pipeline grew to $1.5 billion in the June quarter from $900 million in the previous quarter.During the Q2 earnings call, without mentioning numbers, Krithivasan said the AI and GenAI pipeline was doubling every quarter.

TCS said in its earnings statement, “While discretionary spends were impacted, clients continued to invest and see improved outcomes using AI/GenAI. We are setting up interdisciplinary AI offices/CoEs to strategize, prioritise and implement AI at scale.”

The firm said, “Our customers are increasingly concentrating on integrating AI throughout their entire enterprise value chain, rather than working on isolated use cases. We are also enabling AI/GenAI capabilities across our suite of products and solutions.”