Indian IT Industry Urged to Embrace AI and Build Indigenous Language Models

'Target 2x revenue with half the workforce': HCL Tech CEO wants Indian IT firms to adopt 'paranoid' mindset for growth

HCL Technologies' CEO stated the traditional IT business model is obsolete due to AI. Companies must adopt a paranoid mindset to stay relevant. Infosys' CEO agreed. The industry should transition to output and platform-based services. Indian tech firms should build proprietary language models. Infosys is seeking acquisitions. Adaptation to AI advancements is crucial to maintaining competitiveness.India's IT industry needs a major change because of artificial intelligence (AI), top executives said at Forum. HCL Technologies CEO C Vijayakumar declared the current business model, which has relied on increasing staff to increase revenue, "obsolete." He said companies must change to stay competitive. Vijayakumar stated that the three-decade-old business model of India's IT industry is no longer viable due to the rise of artificial intelligence (AI). Vijayakumar emphasised the need for companies to adopt a "paranoid" mindset to stay relevant and drive growth. Vijayakumar pointed out that the industry has seen a linear increase in revenue and workforce over the past 30 years, but this approach is now being disrupted. He revealed that HCL has been challenging its teams to generate twice the revenue with half the workforce by leveraging AI-driven automation to enhance productivity. Infosys CEO Salil Parekh agreed with Vijayakumar on the need for vigilance in the evolving technology landscape. "The Indian IT industry needs to be paranoid to be relevant," Parekh said. He also highlighted that a large part of the industry operates on input-based models and stressed the importance of shifting to output and platform-based services. Vijayakumar also advocated for Indian IT firms to develop their own large language models. He cautioned against relying on existing open-source models due to potential geopolitical risks. He said that building proprietary models could provide a long-term competitive edge as costs decrease. On growth strategies, Parekh mentioned that Infosys is looking at major acquisitions to expand capabilities. Vijayakumar, however, noted that for HCL, company size is less significant compared to leveraging AI for efficiency and innovation.

Indian IT 'Should Be Paranoid' About AI & Ditch its 30-Year-Old Business Model

AI tools are looking to make the future difficult for Indian IT firms. Indian IT giants like TCS, Infosys, HCLTech, and Wipro have largely stayed away from building foundational AI models. This remained true even after the launch of China's DeepSeek, which shook up the entire Western world. However, India's focus has remained on adoption. Now, things might finally change as AI tools are looking to make the future difficult for Indian IT firms, and they must rethink their strategies and invest in indigenous language models to remain competitive. Speaking at an industry event in Mumbai, HCLTech CEO Vijayakumar C emphasised that AI's disruption in IT services is unlike previous technological shifts such as cloud computing and digital transformation. "The changes AI is assuring are very different, and we need to be more proactive to even categorise our revenues to create completely new businesses," he said. Generative AI is expected to accelerate software development by automating coding and reducing project timelines. Vijayakumar pointed to a financial services firm where AI-driven efficiencies reduced the timelines of a $1 billion technology transformation program from five years to three-and-a-half years. Highlighting the strategic need for India to build its own language models, he cautioned against over-reliance on foreign AI infrastructure. "We should not assume that these (language) models will continue to be open source. I think these are going to be the coins on which the geopolitics will be played off," he warned. Is it Really Needed? Vijayakumar stressed that with declining costs of AI training, India must invest in economic ways to develop its own models. "I strongly believe that the business model is ripe for disruption. What we saw in the last 30 years was a fairly linear scaling of revenues and people. I think time is already up for that (business model)," he added. Infosys CEO Salil Parekh echoed the call for agility, urging Indian IT firms to remain proactive in navigating AI-driven transformations. "I think we have to be paranoid. We have to be non-complacent. That is how we can manage to keep up with what's going on in the industry," Parekh said. Tanay Pratap, YouTuber and founder and CEO of Invact Metaversity, while speaking to AIM earlier, stressed that AI coding tools and agents coming up in the market could threaten Indian IT employees. "Thirty years of IT revolution in the country, but we still don't know how to produce coders at scale," Pratap said. He added that even when graduates come out of universities with a computer science degree in India and join IT firms, their ability to code still remains questionable. Currently, the biggest exporter in India that contributes to the economy is the IT service companies. However, instead of having coders and programmers, these IT services support testing-related roles. "The whole business model [of Indian IT] is about exporting services like testing to global customers," Pratap said, adding that this could be under threat. Vijaykumar also believes that a large part of the IT industry is driven by input-based models. "People are delivering certain outcomes. We need to dramatically change the output." He added that a lot of services that these firms deliver need to become platform-based from people-based. This aligns with K Krithivasan, CEO and MD of TCS, who earlier pointed out that building LLMs has no huge advantage as the cost outweighs the benefit. He added that since most organisations in India are system integrators, companies need to use products as software and ensure that clients receive the benefits. At the same time, he also agreed that building it for regional languages makes sense for democratising the technology. Recently, discussions on a bustling Reddit thread titled 'I don't see any hope in the future of this IT industry' centred around how AI is definitely stronger than humans and will get better with time. What Should be Done? Even though the IT firms have enough funds to make a foundational model, they won't build one unless their clients ask them to or there is some requirement from their side. The whole idea of IT companies not building products might need to change completely if it needs to survive. While TCS, Infosys, Wipro, and HCLTech have started developing agentic AI frameworks, small language models, and even drug discovery, their efforts remain focused on clients alone. These initiatives do not prioritise building foundational technologies for the country. Tech Mahindra built its Project Indus, the only foundational model emerging from an IT firm in India. Infosys co-founders Nandan Nilekani and Kris Gopalakrishnan are still debating whether they need one. Gopalakrishnan earlier wrote on X that India needs to build its foundation model for a cultural and strategic economy, while Nilekani recently reiterated that a foundational model is unnecessary as long as use cases are built. Meanwhile, several industry experts like Ajai Chowdhry and CP Gurnani earlier told AIM that it is important for Indian firms to build foundational models. It seems like it is finally going to take place with HCLTech's change of plans.

India's IT sector should overhaul business, create own language models, HCLTech CEO says

MUMBAI, Feb 24 (Reuters) - Indian IT firms need to rethink how they operate and the country needs to create its own language models as artificial intelligence technologies disrupt the sector, according to HCLTech (HCLT.NS), opens new tab CEO C Vijayakumar. The generative AI boom has threatened to disrupt business models for Indian IT companies that largely serve clients in the United States for operations support, providing software as a service. "The underlying themes are not the same as cloud and digitization and other things ... This is very different. The changes that AI is assuring are very different, and we need to be more proactive to even categorize our revenues to create completely new businesses," Vijayakumar said at an industry event in Mumbai. Generative AI, which can write code for software among a plethora of tasks, is expected to speed up the timeline to develop products, improving efficiency of a company's workforce. For an example, a five-year technology transformational program valued at about $1 billion at a very large financial services firm could be done in three-and-a-half years, Vijayakumar said. He also said India should build its own language models to cut down dependency on other countries and avoid impact from geopolitical issues. Large language models are trained on massive amounts of data to generate text and other content. "We should not assume that these (language) models will continue to be open source. I think these are going to be the coins on which the geopolitics is going to be played off," Vijayakumar said, adding that countries could limit some usage beyond their boundaries. "To have a long-term competitive advantage, it makes a lot of sense to build and the costs are coming down. We need to find ways to very economically create a training infrastructure to train the models," he said. IT industry executives also said the sector needs to avoid complacency to adapt and overcome challenges. "I think we have to be paranoid. We have to be non-complacent. That is the way we can manage to keep up with what's going on in the industry," Infosys (INFY.NS), opens new tab CEO Salil Parekh said. Reporting by Haripriya, Akash Sriram, writing by Sethuraman NR; Editing by Shilpi Majumdar Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence Haripriya Suresh Thomson Reuters Haripriya reports on India's $254-billion Indian information technology (IT) industry, the country's burgeoning GCCs, as well as new-age startups. With seven years of experience, she has previously reported on politics, civic issues, crime, and breaking news in south India, and tracked the country's gig economy. She has a degree in Media Studies with a specialisation in journalism from the Symbiosis Centre for Media and Communication. Akash Sriram Thomson Reuters Akash reports on technology companies in the United States, electric vehicle companies, and the space industry. His reporting usually appears in the Autos & Transportation and Technology sections. He has a postgraduate degree in Conflict, Development, and Security from the University of Leeds. Akash's interests include music, football (soccer), and Formula 1.

India Needs To Build Own LLMs To Reduce Reliance On Other Countries: HCLTech CEO India Needs To Build Own LLMs To Reduce Reliance On Other Countries: HCLTech CEO

IT major Infosys chief Salil Parekh said that India needs to ensure it is the leading light of generative AI by making investments to create foundational models IT giant HCLTech CEO C Vijayakumar said that India needs to build its own large language models (LLMs) to limit reliance on open-source AI models and have a long-term competitive advantage. Speaking at Nasscom Technology and Leadership Forum 2025, Vijayakumar said that building models on top of existing models may work for now, but there is a possibility that these open-source models may not remain accessible in the longer run. "We can make models on top of the existing global models, but we shouldn't assume that the open-source models will continue to be open source," he said. "These are going to be the coins on which the geopolitics will be played on." He further warned that the leading AI companies like OpenAI , Meta, or DeepSeek may limit the usage of their AI models at some point in the future. To have a competitive advantage in the long term, India needs to find ways to create an economic training infrastructure to train the models. Chiming in, IT major Infosys chief Salil Parekh said, "The cost of building models is falling, so when the time is right, we should make sure that we make the right investments and build small language models." Parekh said that India needs to ensure it is the leading light of generative AI by making investments to create foundational models. The development comes amid a growing debate about the need for India to have its own LLM. While Indian IT giants like TCS, Infosys, HCLTech and Wipro are banking on GenAI to grow their businesses, they have refrained from making their own LLMs so far. Last month, Perplexity founder and CEO Aravind Srinivas said that India should build its own foundational models. This came a few months after Infosys cofounder Nandan Nilekani said that India shouldn't focus on building foundational models from scratch. Meanwhile, amid the rising popularity of China's DeepSeek, the IndiaAI Mission, last month, floated a proposal inviting applications from startups, researchers, and entrepreneurs to collaborate on building foundational AI models trained on Indian datasets. The Centre has received about 67 proposals for building indigeneous foundational models. At the heart of this push is the growing adoption of GenAI in the country. This has also spawned the rise of more than 200 GenAI startups that have raised more than $1.2 Bn since 2020.