As it transitions from being a digital enterprise to an AI-enterprise, Indian IT services firm Tata Consultancy Services (TCS) will rely on partnerships with AI hyper-scalers and acquisitions to build capabilities and hire talent.At its investor day presentation on December 17, CEO K Krithivasan quantified the annual revenue rate of its AI business for the first time at $1.5 billion, growing by 16.3 percent quarter-on-quarter. Major sectors that have contributed to this earning include BFSI, life sciences and health care, and technology and services. Krithivasan added that the company aspires to become the world’s largest AI-led technology company.“There is a massive internal transformation going on and we are encouraging all our associates to adopt an AI-first culture,” said Krithivasan. “What we mean by this is, every time we engage with our clients, the first question we ask is what can AI do here? Can it do something better than us, even if it means cannibalising our own revenue? AI-first culture means giving the first right of refusal to AI.”He also said that TCS will broaden its AI capabilities through partnerships and acquisitions to speed up its go-to-market strategy. The company recently announced its acquisition of Coastal Cloud for $700 million and ListEngage for $72.8 million in October 2025, both Salesforce consulting firms in the US. The acquisitions will help TCS bolster its AI talent pool and strengthen its position in Salesforce advisory. The company indicated that it was bullish on acquisitions as a key lever for growth, while continuing to maintain an EBIT margin of 26 to 28 percent.Investing in acquisitions as a growth leverThe firm is focusing on build, partner and acquire strategy to create an end-to-end AI services stack for its customers. During the investor presentation, CFO Samir Seksaria said that TCS had invested $1 billion on an annualised basis in building its AI capabilities—learning and development, targeted research and innovation, and infrastructure building. This excludes the $1 billion investment by private equity player TPG in TCS’ 1 GW scale, AI-ready data centre capacity, HyperVault, announced in November.“Our investment approach is towards balancing innovation speed with scalable profitable growth,” said Seksaria. “Our overall strategy is towards build, acquire and partner. Traditionally, TCS has looked at investing in the organic side of it but as we heard, for speed, we have changed our strategy into all three.” He said the investments in building and scaling AI capabilities at TCS will be funded by repurposing some of the spends, leveraging the balance sheets and offsetting the remainder through operational efficiencies.Following TCS’ investor day presentation, brokerage firm Motilal Oswal maintained a ‘Buy’ rating on the company. “TCS emphasised an ecosystem-led approach, spanning AI-native partnerships (Cursor, Kore.ai, Vianai, Windsurf), strategic alliances with foundational model providers (OpenAI, Mistral AI), and infrastructure partners such as Nvidia. The company also highlighted its work with Google Gemini Enterprise, including early efforts around agent-to-agent protocols,” said the report, highlighting the partnership models being explored by TCS.Why transformation is keyThe investor presentation builds on TCS’s announcement in Q2FY26 of pivoting to an AI-led technology services company through five pillars of implementation: Internal transformation with an AI-first operating model, redefining services through new AI services and Human+AI delivery model, creating future-ready talent, making AI real for clients through domain-specific solutions, and creating an AI ecosystem strategy spanning partnerships, M&A and new venture creation.As part of its new venture creation, the company announced the HyperVault data centre network, outlining an investment of $2 billion over the next few years. During the investor presentation, Seksaria clarified that the data centre will partner with an AI company or a hyper-scaler as an anchor customer, for both front-end and back-end synergies.Timing is key, according to analysts, given the speed at which technology is evolving. “If global enterprises delay the technological shift, they risk losing innovation share to faster rivals and watching their best developers exit for venture-funded startups that already embody the autonomous ethos. While some companies look at the broader market (not just AI and other automation), they do need to navigate the volatility, uncertainty, complexity and ambiguity (VUCA) world and the AI onslaught, otherwise they face a risk of stagnation and irrelevance,” said Anushree Verma, senior director analyst at Gartner.With a clear plan of action, the speed of execution will determine the success of TCS’ transformation into an AI-led services company.