AI Accelerates Software Modernization Deals for Top Indian IT Firms

Four of the country’s largest offshore IT services providers – Tata Consultancy Services Limited, Infosys Limited, HCL Technologies Limited, and Wipro Limited – have reported a substantial rise in software modernization deals. These contracts involve replacing old information technology software with new systems capable of handling large amounts of data and performing artificial intelligence (AI) tasks efficiently. According to company earnings calls, AI is significantly expediting these upgrades and reducing the costs associated with modernizing legacy systems. Analysts like Peter Bendor-Samuel note that AI tools are making it much more feasible for firms to address long-deferred expenses in updating their digital core. Tata Consultancy Services and Infosys are reportedly securing a higher share of these core modernization deals, particularly in sectors like banking, insurance, and healthcare, as identified by Phil Fersht of HFS Research. This trend offers a vital opportunity for India's $283-billion IT sector, providing a strategic advantage amidst global economic uncertainties. K Krithivasan, CEO of Tata Consultancy Services, highlighted how GenAI can be used to understand legacy code and forward-engineer new code, while Salil Parekh, CEO of Infosys, emphasized AI's role in shortening project timelines and improving return on investment (ROI) for clients. HCL Technologies and Wipro Limited also reported strong demand, with HCL Technologies noting significant large legacy modernization programs.
Impact: This news indicates a strong positive outlook for the revenue and growth prospects of these major Indian IT companies, as they are well-positioned to capitalize on the increasing demand for AI-ready infrastructure and continuous transformation partnerships. Rating: 8/10.
Difficult terms: Software Modernization: The process of updating outdated software systems to newer, more efficient, and technologically advanced ones. Legacy Software: Older computer programs that are still in use but are no longer supported or are difficult to update or integrate with modern systems. Backend Tech Work: The internal IT operations and systems that support a company's core functions, such as data management, processing, and infrastructure, which are not directly visible to end-users. GenAI (Generative AI): A type of artificial intelligence that can create new content, such as text, images, code, and more, based on the data it has been trained on. Agentic AI: AI systems designed to act autonomously to achieve specific goals, often involving complex decision-making and task execution. Tech Debt: Refers to the implicit cost of additional rework caused by choosing an easy (limited) solution now instead of using a better approach that would take longer. In IT, it often means running older, inefficient systems that are costly to maintain. ROI (Return on Investment): A performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. It is the benefit to be ascertained from an investment. BFSI sector: An acronym for Banking, Financial Services, and Insurance.