Tata Consultancy Services (TCS) is assembling a team of up to 8,900 forward-deployed engineers and actively hunting for AI acquisitions, two executives told Reuters, as India's largest IT services firm bets that artificial intelligence will create new business rather than erode its outsourcing model. The move comes amid growing investor anxiety that AI could disrupt India's $315 billion IT services industry by shrinking demand for engineering teams, shortening project timelines, and squeezing prices.
Building an army of forward-deployed engineers
CEO K Krithivasan said the company aims to make 1% to 1.5% of its associates into what it calls forward-deployed engineers (FDEs). Based on TCS's end-June headcount, that translates to roughly 5,900 to 8,900 employees. Krithivasan did not specify whether the company would hire externally or retrain existing staff.
FDEs embed directly with clients to speed up AI adoption and tailor tools to specific business needs. The role has become a rare hiring bright spot in a sector grappling with AI-driven efficiency gains. TCS's plan puts it in direct competition with firms such as OpenAI, Anthropic and Microsoft, all of which have expanded their own FDE hiring to help clients deploy AI tools.
Acquisition strategy shift
After years of relying almost entirely on organic growth, TCS is now evaluating AI acquisitions alongside deals in data security and cybersecurity. CFO Samir Seksaria said, "We are looking at where we can find things which will help us enable or enhance our strategic positioning." The company only began reconsidering acquisitions in late 2025.
AI: Friend or foe?
Krithivasan dismissed concerns that AI would undermine the outsourcing model. He argued that companies still need partners like TCS to integrate and deploy AI systems. "What you need is a deep knowledge of the customer environment to make it work. That is where we differentiate ourselves. This has nothing to do with cost arbitrage. It's essentially because of the talent pool that we have built," he said.
As enterprises increasingly use multiple AI models, they require help connecting those models to existing systems and managing data flows. Krithivasan sees that integration work as TCS's core advantage.
Still, TCS's annualised AI revenue growth slowed to 13% in the first quarter, down from 28% in the previous quarter. Krithivasan said he would like the business to grow about 25% quarter-on-quarter over the long term but does not expect a linear trajectory. TCS spends roughly $1 billion a year on talent development and making AI accessible internally, with a focus on training, targeted hiring and niche recruitment in AI-native technologies, Seksaria added.
Why this matters for Executives and Strategy
TCS's pivot signals that even legacy IT services firms are betting on deep client integration and AI acquisitions as both a defensive and offensive move. For executives, the key takeaway is that AI's impact on outsourcing is not a simple substitution threat - it is reshaping talent models and partnership dynamics. The emergence of forward-deployed engineering as a competitive differentiator will likely influence how enterprises structure their own AI adoption efforts. For leaders shaping their companies' AI roadmaps, resources such as AI for Executives & Strategy offer frameworks for navigating similar decisions.
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