TCS, Infosys, Wipro Move 80% of Contracts to Outcome‑Based Fees Amid AI‑Driven Price Pressure
· Business · Economic Times, The Hindu, LiveMint
Indian outsourcing giants Tata Consultancy Services, Infosys, Wipro, HCLTech and Cognizant are redesigning contracts to link fees to performance outcomes rather than billable hours. Clients are demanding steep price cuts and higher productivity, prompting firms to adopt outcome‑based pricing. About 80% of TCS’s finance, HR and business services contracts now use performance measures, according to CEO K Krithivasan. The shift follows AI enabling customers to bring tasks in‑house and shortening contract durations. Larger firms are losing work to smaller rivals that can leverage AI faster, while the Nifty IT index has fallen about 20% this year, erasing $73 billion in market value.
Why it matters
The move directly reshapes revenue models for India’s $315 billion IT services industry and could alter hiring and pricing for thousands of IT workers and corporate clients. Investors and employees must adjust to a market where billable hours matter less and measurable outcomes drive earnings.
Read the original report — Economic Times
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