N Chandrasekaran, chairman of Tata Sons, is stepping up his direct involvement with Tata Consultancy Services (TCS) as the group seeks to protect its biggest cash generator during a period of rapid disruption triggered by artificial intelligence, according to a report by The Economic Times, citing people familiar with the matter.
The renewed engagement comes at a time when advances in AI are beginning to threaten the traditional outsourcing-led IT services model. Tata Sons is keen to ensure that TCS retains its relevance with global clients and remains central to the group's financial engine, the people said.
Making TCS The Group's AI Backbone
As part of this push, Chandrasekaran is understood to be backing a plan to position TCS as the default AI and technology partner for Tata Group companies. The company is also exploring acquisitions of AI-focused startups to speed up its transition and build differentiated capabilities.
“The legacy business model of TCS cannot stay the way it was,” a senior executive close to the developments told The Economic Times. According to the report, Chandrasekaran has asked the leadership team to prioritise growth while aggressively defending the company's turf.
Addressing over 700 TCS employees at an internal event in Dubai over the weekend, Chandrasekaran underscored the need for continuous upskilling, warning that AI will fundamentally reshape how technology services are delivered.
Leadership Continuity, Execution Focus
TCS chief executive K Krithivasan and chief operating officer Aarti Subramanian—both of whom worked closely with Chandrasekaran during his earlier tenure at TCS—are seen as key to executing this strategy. Tata Sons wants tighter oversight to ensure the AI pivot is translated into end-to-end execution, the people cited by The Economic Times said.
The urgency has been amplified by developments in the global AI ecosystem. New products from AI labs such as Anthropic are moving rapidly up the value chain, potentially disintermediating legacy IT vendors if they fail to adapt quickly.
Market Jitters Highlight Risks
The risks were reflected in markets earlier this month. Following announcements around new AI platforms, global technology stocks sold off sharply. In India, the Nifty IT plunged as much as 8% on February 4, erasing nearly ₹2 lakh crore in market capitalisation, with TCS hitting a five-year low before staging a modest recovery.
Global examples—from Palantir Technologies to Goldman Sachs—show how firms are building proprietary AI platforms or partnering with AI labs, raising the bar for traditional service providers.
As of 2024, Tata Sons owns 71.74% of TCS, with nearly 80% of its dividend income coming from the IT major, The Economic Times reported. With so much at stake, Chandrasekaran's closer involvement signals that the AI transition at TCS has moved from strategy decks to the top of the Tata Group's priority list.
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