Gen AI boosting productivity of Indian IT industry’s fastest-growing niche, TCS exec says

Generative AI is helping India’s top IT firm Tata Consultancy Services accelerate development in the industry’s fastest-growing niche of engineering research and design, a senior executive told Reuters.

TCS, which has clients such as Rolls Royce, Jaguar Land Rover and Siemens, has seen product development cycles for engineering-related clients quicken by as much as 20% and expects further improvement, Sreenivasa Chakravarti, vice president of internet of things and digital engineering, said on Wednesday.

Generative AI has taken centre stage in the space and clients are replanning budgets and product features, Chakravarti said. He did not name any clients while referring to the productivity improvements.

“It (generative AI) is used for code generation, testing and quality (assurance) which are low-hanging fruits right now.”

Engineering, research and design services, which include technology support to hardware-oriented industries such as self-driving and sustainability solutions for oil and gas companies, contribute a sixth of the revenue in India’s storied $254 billion tech industry.

The niche was estimated to grow 7.5% in the fiscal year 2024, the fastest among all sectors, according to data from the National Association of Software and Service Companies.

The IT industry body expects the engineering, research and design space to nearly quadruple between 2023 and 2030 to as much as $170 billion.
Apart from pure-play software services firms such as TCS, Infosys and Wipro, the space also has focussed players like Tata Elxsi, Cyient and L&T Technology Services.

India’s core software services have been facing macroeconomic headwinds and technology sector growth is estimated to have slowed as clients hold back spending.

Meanwhile, the engineering, research and design niche has been heating up as large IT firms buy out peers.

Cognizant snapped up digital engineering firm Bulcan for $1.3 billion in June and Infosys acquired German player in-tech for $480 million this year.