How India’s IT Giants Banking on Startups to Stay Relevant in the Gen AI Era?

India’s IT powerhouses—TCS, Infosys, Wipro, HCLTech, and Tech Mahindra—are undergoing a quiet but profound shift.

For decades, these companies thrived on a services-led model, scaling revenues with headcounts. But with the rise of Generative AI (Gen AI), automation, and low-code/no-code platforms, this traditional model is losing steam. Growth has slowed. Expectations have changed. And the path forward now looks starkly different.

Today, these tech giants are making a strategic bet on startups. They’re not just investing in them; they’re partnering, co-creating, and embedding startup-led innovation directly into their offerings. In an era of disruptive change, India’s IT majors are leaning on the agility, speed, and fresh thinking of startups to remain at the forefront.

“The clock has already run out on the traditional IT services model,” Infosys and HCLTech CEOs admitted earlier this year.

So what exactly is happening? And why are startups becoming so central to IT’s next chapter?

From Services to Platforms: A Pivot in Progress

Annual reports from India’s top IT firms are telling. Whether it’s TCS, Infosys, Wipro, HCLTech, or Tech Mahindra, there’s a clear push to move away from low-margin, headcount-driven revenue models toward IP-led platforms, automation tools, and co-created solutions.

And startups are playing a vital role in powering this transformation.

TCS: Co-Innovation at Scale

India’s largest IT firm, Tata Consultancy Services (TCS), has quietly built one of the biggest startup ecosystems in the IT services world—the Co-Innovation Network (COIN).

• In FY21, COIN had 2,400 startup partners.

• This grew to 2,600 in FY22, 2,900 in FY24, and 3,000 in FY25.

• Alongside, TCS has built 55 active partnerships with top academic institutions.

Rather than investing directly in startups, TCS focuses on co-creating prototypes and solutions in emerging areas like Gen AI, blockchain, cybersecurity, and IoT. The goal is to rapidly integrate startup innovations into enterprise-grade solutions.

This model allows TCS to stay nimble without the baggage of equity holdings—offering speed and scalability in innovation.

Infosys: From Fund to Fusion

Infosys too has shifted gears. While its $500 million Innovation Fund—launched in 2015—remains intact, the real action now lies in its Infosys Innovation Network (IIN).

• In FY22, IIN had 150+ startups.

• By FY24, it had grown to 305.

• In FY25, this figure crossed 370 startups.

Infosys isn’t chasing returns from startup exits anymore. Instead, it is embedding startup capabilities into its delivery models and client solutions. It’s a deeper level of collaboration—co-creation over capital.

“Startups are no longer just investments—they’re co-creators of next-gen delivery models,” an industry analyst noted.

Wipro: The Investor Among Operators

Wipro is perhaps the most direct investor among its peers, thanks to Wipro Ventures, its dedicated corporate venture arm.

• Started in 2015, the fund began with 16 active investments.

• By FY22, it had 25 investments and 6 successful M&A exits.

• In FY24, it reported 26 active investments and 10 venture fund partnerships.

• By FY25, Wipro Ventures had grown to 38 total investments, with 13 exits.

The fund focuses on early- and mid-stage enterprise tech startups, especially those building in AI and automation. The results? Wipro Ventures has helped generate over $200 million in influenced revenue so far—a sign that these bets are bearing commercial fruit.

HCLTech: Build, Don’t Buy

Unlike Wipro, HCLTech has chosen not to float a venture fund. Instead, its approach is sharply focused on integration over investment.

Through its Innovation Labs and co-creation programs, HCLTech brings startup technologies directly into its platforms like DRYiCE and IoTWorks.

Described internally as a “build and integrate” model, this lets HCLTech stay focused on creating IP while still leveraging startup agility—without getting tangled in the complexities of equity management.

Tech Mahindra: An Early Mover

Tech Mahindra was one of the earliest large IT firms in India to build strategic partnerships with startups.

• In FY21 alone, it collaborated with over 80 startups, academic institutions, and industry players.

• The focus was emerging tech—5G, automotive software, and immersive tech.

• Its Makers Lab continues to explore innovations beyond conventional IT services.

Although it hasn’t updated recent startup engagement numbers, the company’s efforts remain rooted in transformational technologies that can create long-term value.

Why This Bet Makes Sense—For Both Sides

This wave of startup partnerships isn’t just about innovation buzzwords. It’s a mutual exchange of value.

“Large IT firms often struggle to build innovation internally due to rigid processes and ROI-focused structures,” says Gaurav Parab, Principal Research Analyst at NelsonHall. “Startups bring agility and fresh tech. In return, they get access to global clients, infrastructure, and resources.”

In simple terms: Startups need scale. IT giants need speed. Together, they help each other thrive in a market that’s moving faster than ever.

While the partnerships are growing, most IT firms don’t break down the specific revenue generated through startups in a transparent manner. This makes it hard to quantify the full impact.

However, from influenced revenue at Wipro to product acceleration at HCLTech, the indirect benefits are becoming visible.

What’s clear is this: in the age of Gen AI, startups are no longer side projects for IT companies. They’re essential engines of transformation.

As technology changes rapidly, India’s IT bigwigs aren’t sitting still. Instead, they’re embracing the energy of the startup world to reinvent themselves.

And in this journey, the message is simple: Adapt or become obsolete. For now, India’s IT majors are choosing to adapt—hand in hand with startups.