AI and Tag B services meet in 2026 as a sunny forecast for the tech services ecosystem. The obituary myth that India’s Tag B would become obsolete by 2030 is getting a polite slap on the wrist. Leaders emphasize that what matters isn’t only wage economics but deep, adaptable skill sets and a culture of practical problem solving. The real story is about speed, scale, and turning clever algorithms into workable business outcomes. AI brings pace; Tag B provides context and governance, and both are here to stay.
In a candid chat with The Economic Times, TCS CEO K Krithivasan pushed back against doom-laden chatter. He reminded listeners that the industry has witnessed obituary talk every decade, yet it endures because some teams study, practice, and adapt with discipline. He argued that Indian Tag B services survive not by chasing lower costs alone but through the depth of skill sets that translate ideas into value. His framing: AI adoption will create demand for real-world integration, not wipe out jobs.
AI and IT services: resilience in 2026
The sentiment in Krithivasan’s words carries into the broader narrative: AI is not a predator that swallows jobs; it is a tool that accelerates meaningful work for Tag B teams. The CEO’s stance is paired with a calm confidence that the workforce will pivot, reskill, and weave AI into enterprise architectures with discipline. The message is not merely motivational; it’s a practical blueprint. It asks leaders to pair every AI pilot with a clear business case, lest the promise devolve into a pile of half-finished prototypes. Tag B provides the governance layer that ensures AI outputs translate into reliable, compliant operations.
COO Aarthi Subramanian joined the chorus, calling AI an opportunity rather than a threat. She highlighted GenAI tools like Claude Cowork and Claude Mythos as enablers, not dangers. In her view, GenAI accelerates legacy modernization, especially for decades-old mainframe systems that have stubbornly refused to retire. The punchline: AI can shrink technical debt and lift productivity across IT operations, turning complex stacks into smoother, more manageable processes.
ET’s coverage sits in the middle of mixed signals. TCS reported its first annual revenue decline since 2004, a 2.4% slide in FY26 amid a broad global tech spending slowdown. Yet the company closed FY26 with a record total contract value of $40.7 billion, including $12 billion in Q4. Decision-making cycles are shortening as clients push AI transformation programs, even amid geopolitical uncertainties. The math is counterintuitive: softer revenue now, bolder commitments later, because AI is redefining what value means.
On the people side, TCS hired 44,000 trainees in FY26 and made 25,000 offers for the next cycle, a signal of long-term confidence despite a 2% workforce reduction last year. In a bold strategic step, TCS acquired Coastal Cloud, a US Salesforce consulting firm, for $700 million, its largest purchase in more than a decade. The aim is clear: build stronger capabilities, broaden client ecosystems, and accelerate delivery of AI-enabled solutions.
AI and IT services are not strangers to each other; they are co-authors of a shared destiny. AI fuels modernization and optimization, while Tag B provides the rails that keep trains on track. In practice, this means more automated checks, smarter data governance, and faster, safer deployments. The combined effect is a higher velocity of innovation across clusters of industries that rely on meticulous integration work and verified outcomes. Tag B teams become translators, ensuring that AI language translates into business impact, risk management, and customer value.
The broader industry perspective for 2026 remains pragmatic. GenAI’s potential to handle repetitive coding tasks frees engineers to tackle design, architecture, and user experience concerns. That shift increases the demand for Tag B specialists who can plan, monitor, and optimize end-to-end solutions. The result is not a hasty sprint but a well-timed marathon where pilots translate into scalable platforms. The leadership at TCS is leaning into this rhythm, balancing ambition with discipline, and choosing projects that demonstrate measurable ROI sooner rather than later.
AI in Tag B modernization is not just a slogan; it’s a real workflow. Subramanian’s emphasis on legacy modernization illustrates the practical energy wave behind the trend. Enterprises running on long-standing mainframes can experience faster modernization by layering GenAI-powered automation atop proven infrastructure. Tag B teams then handle integration, security, and change management. This combination creates a safer path from experimentation to production reliability, a critical transition for any large organization navigating regulatory and compliance terrains.
Meanwhile, the acquisition strategy signals a deliberate expansion of capabilities. Coastal Cloud strengthens Salesforce-based ecosystems for customers pursuing CRM-led transformations. The result is a broader, more capable advisory layer that blends AI-enabled analytics with customer-facing platforms. In a market where AI investments can seem speculative, such acquisitions provide tangible capability stacks that clients can trust. It’s not about chasing speed for its own sake but about delivering stable, repeatable outcomes at scale.
AI in IT services modernization: bridging gaps
In close, the 2026 forecast is a well-constructed blend of AI acceleration and Tag B discipline. It is not a fairy tale about robots taking all our jobs; it’s a narrative about partnerships that empower humans to do higher-value work while algorithms handle the drudgery and risk-prone tasks. The emphasis remains on measurable impact, governance, and the ability to scale successful AI programs from pilots into enterprise-wide programs. The result is a stronger, more resilient technology services industry ready for the next wave of digital transformation.
AI adoption boosts IT services productivity
To readers outside the halls of AI and Tag B giants, the essential takeaway is this: AI amplifies productivity when paired with the proven processes of Tag B. The right pairing reduces cycle times, improves accuracy, and lowers the likelihood of costly outages. The practical guidance is simple: quantify business value, advance with confidence, and keep a human-in-the-loop mindset for governance and ethical considerations. In 2026, AI complements Tag B; it does not replace them.
We close with a forward-looking note: AI and Tag B are co-authors of the same growth story. If you have a view on how these trends will affect your organization, share your perspective in the comments. Let’s discuss what AI-powered Tag B could unlock next and how enterprises can balance speed with responsibility in 2026.
Original article: The Economic Times: TCS CEO on AI Opportunity. Thank you to The Economic Times for the original reporting that informed this synthesis.
References
- The Economic Times: TCS CEO on AI Opportunity
- McKinsey: Artificial Intelligence in Business
- Harvard Business Review: Artificial Intelligence for the Real World
- BCG: AI and the Business Value