Indian IT's AI narrative is dominated by two questions: who is winning the most AI deals, and what is the margin impact? Both TCS and Infosys have given bullish guidance on Gen AI pipeline. But the devil — as always — is in the financial statement, not the earnings call transcript.
Revenue Scale and Mix: The Starting Point
TCS reported revenue of approximately $29 billion in FY25, with BFSI contributing ~32%, retail & consumer ~15%, and manufacturing ~9%. Its EBIT margin stood at ~24-25%. Infosys reported ~$18.8 billion in revenue, with financial services at ~28%, retail at ~17%. EBIT margin ~21%.
The Margin Paradox of AI
AI is simultaneously a margin opportunity and a margin risk. Opportunity: AI-enabled developers can be 20-30% more productive, theoretically reducing headcount growth needed for the same revenue. Risk: the cost of GPU access for AI project delivery, investment in training, and the pricing pressure clients exert ("your AI tools make your people more productive — pass the savings to us") may offset efficiency gains.
- TCS FY25 revenue: ~$29B | EBIT margin: ~24.5%
- Infosys FY25 revenue: ~$18.8B | EBIT margin: ~21%
- TCS headcount: ~600k | Revenue per employee: ~$48k
- Infosys headcount: ~320k | Revenue per employee: ~$59k
- Infosys Topaz (AI platform) revenue: disclosed separately from FY24
🔍 BBS Insight
The AI revenue war between TCS and Infosys is real but early. The better analytical question is not "who wins" but "when does AI revenue become material enough to re-rate margins?" Track two metrics: (1) revenue per employee — if AI is truly productive, this rises; (2) EBIT margin in the segment most exposed to AI transformation (BFSI for both companies). Margin expansion in BFSI, driven by AI productivity, will be the first visible proof point of the AI revenue story actually working.