Infosys CEO Salil Parekh announced plans to grow AI-driven services to half of total operations within three years, up from the current 8%. While the strategy aims to lead the company's future growth, management highlighted risks including high infrastructure costs and regulatory hurdles. Infosys shares rose today, tracking a broader gain in Indian IT stocks.
Infosys is shifting its core business strategy as artificial intelligence moves from a niche service to a primary driver of its operations. CEO Salil Parekh recently outlined a roadmap to scale AI-driven projects so that they account for nearly 50% of the company's total output within the next two to three years. Currently, these services contribute approximately 8% of the company’s revenue, but the firm is seeing double-digit growth in this segment every quarter.
This transition comes as the company maintains its fiscal targets. For the 2027 fiscal year, Infosys has provided guidance of 1.5% to 3.0% revenue growth in constant currency, with an operating margin target of 20% to 22%. The company reported a 21.1% operating margin in the first quarter of fiscal 2027, indicating that it is managing its current profitability while investing heavily in new capabilities.
To achieve its ambitious AI targets, Infosys is reorganizing its workforce. The company has already engaged 80,000 employees in AI-related tasks, including coding tools and system modernization. Recruitment remains consistent with legacy requirements, as the firm plans to add 20,000 fresh graduates this year. These new employees are expected to undergo mandatory training to handle the complexities of AI deployment for clients immediately upon joining.
However, this aggressive expansion is not without significant business challenges. Management has pointed to the volatile costs of specialized AI chips and data center infrastructure as a potential risk to long-term profit margins. There is also the threat of technological obsolescence; the rapid evolution of foundation models toward cheaper, open-weight alternatives could make current high-cost infrastructure less valuable in the coming years.
Regulatory risks also remain a key monitorable. Increasing requirements for sovereign data storage—which dictate where data must be kept—could limit the company's ability to scale centralized cloud capacity. Furthermore, management noted that societal and labor concerns in Western markets could eventually put pressure on the pace of AI adoption, forcing a balancing act between economic incentives and public policy.
The market reacted positively to these updates, with Infosys shares seeing gains today, consistent with a broader rally in the Indian IT sector. Moving forward, investors may track whether the company can successfully convert this AI strategy into sustainable client spending, especially as corporate budgets for discretionary technology projects remain selective.