Infosys Says AI Will Lift Demand as Investors Question the Model

Infosys Ltd told investors this week that artificial intelligence will expand demand for technology services rather than undermine it, using its annual shareholder meeting to answer a question now hanging over much of India’s outsourcing industry: what happens when software starts writing software?

Chairman Nandan Nilekani said the Bengaluru-based company is positioned to tap an AI-first services opportunity of $300 billion to $400 billion by 2030, as large enterprises move from experiments to deployment.

The pitch came at Infosys’s 45th annual general meeting on Tuesday, days after Indian IT stocks were hit by renewed concerns over weak discretionary technology spending and the impact of AI-led automation on traditional services revenue.

The anxiety is no longer abstract. If coding becomes increasingly automated, clients may need fewer people from companies such as Infosys for application development and maintenance, long the industry’s core revenue engine. Nilekani acknowledged that concern directly.

“The existential question that is asked of us is, if coding becomes automated, then why are we needed at all?” he told shareholders.

Nilekani framed the answer around the complexity of enterprise technology. Large companies still need systems that fit their existing architecture, pass security and compliance tests, work with old transaction platforms, and handle governed data across markets.

“The AI deployment gap in our large enterprise clients is real, and closing that gap is where the work is,” Nilekani said. “AI will not replace companies like ours. It will amplify those who move with purpose and adapt with speed.”

Infosys said it is already working with 90% of its top 200 clients on AI initiatives. The company has more than 4,600 AI projects underway and has built more than 30 service offerings across its AI value framework, according to its annual report.

That framework divides the opportunity into six areas: AI strategy and engineering, agentic legacy modernization, data for AI, process AI, physical AI and AI trust. The company is trying to position those areas as a new growth map for clients that are still stuck with fragmented data, legacy systems, and limited AI talent.

Chief Executive Officer Salil Parekh told shareholders that Infosys’s AI services revenue was about 5.5% of total revenue, equal to roughly $1 billion on an annualized basis, and growing quickly.

The company also said Infosys Cobalt, its cloud services portfolio, would support AI deployments by helping clients modernize their technology foundations.

The sharper commercial opportunity may be legacy modernization. Nilekani said AI has made old technology estates harder for clients to ignore, as companies try to connect models and agents with the transaction systems that still run their businesses.

“The greatest value will come from combining the world of models and agents with traditional transaction systems that continue to underpin enterprise operations,” he said.

Infosys’s investor message, however, had to do more than defend the AI thesis.

In the AGM, Shareholders also raised concerns about leadership continuity, margins, growth and the share price.

Multiple shareholders sought clarity on CEO succession. Parekh’s current five-year term runs until 31 March 2027.

Shareholders also asked whether AI would help or hurt margins, and whether Infosys could return to double-digit growth.

Parekh said productivity savings shared with clients were coming back as new projects, helping non-linear growth, while Chief Financial Officer Jayesh Sanghrajka said demand remained soft as clients stayed cautious because of macro concerns.

The caution is visible in the company’s own outlook. Infosys has guided for FY27 revenue growth of 1.5% to 3.5% in constant currency and operating margins of 20% to 22%. In its April earnings call, management said client spending remained guarded, with greater focus on cost optimization than growth-led transformation.

For FY26, Infosys reported $20.2 billion in revenue, up 3.1% in constant currency. Adjusted operating margin stood at 21%, and free cash flow was $3.7 billion, or 112.6% of net profit. Large deal total contract value was $14.9 billion, with 55% classified as net new business.

The company also recruited more than 20,000 college graduates in FY26 and ended the year with more than 325,000 employees.