When the family behind Cigniti Technologies, led by founder CV Subramanyam and, later, his son Srikanth Chakkilam, exited the digital engineering firm, they didn’t walk away from technology services altogether.
Instead, the father-son duo launched Covasant to move beyond the traditional information technology (IT) services model that made India’s outsourcing giants rich but is now running out of time.
The warning signs aren’t coming just from startups such as Covasant. CEOs of HCLTech and Infosys have said openly that the people-heavy, pyramid-shaped delivery model is nearing its limits. Automation and artificial intelligence (AI) are reshaping how contracts are executed and the next wave, Agentic AI, could further flatten the pyramid.
“If $1 million in offshore revenue used to take 20-25 people, why can’t we deliver the same outcome with fewer people and more software,” Chakkilam told Moneycontrol.
Also read: Infosys, HCLTech, Wipro, Tech Mahindra bet big on Agentic AI in 2025
The clock is ticking
The shift is not just Covasant’s idea. HCLTech and Infosys leaders have acknowledged that time is running out for the legacy IT services model. Pricing pressure, automation and the adoption of AI are forcing even the largest players to rethink their delivery structures.
Annual reports from the top five Indian IT companies tell the story in numbers. Average revenue per employee, a key efficiency metric, has been largely stagnant over the past five years, hovering in the $50,000-$60,000 range for most firms. That’s despite rising billing rates in niche areas, suggesting that productivity gains from automation haven’t fully materialised yet.
Chakkilam’s bet is that Agentic AI, autonomous, domain-specific software agents, can change that equation far faster. “We don’t have the baggage of thousands of people to retrain. Our model starts lean and stays lean,” he added.
Agentic AI: On IT giants’ radar
Covasant isn’t alone in chasing this future. IT giants have put their might into delivering Agentic AI solutions to clients.
India’s largest IT services company TCS is building thousands of AI agents for various industries, its AI chief, Ashok Krish, told Moneycontrol earlier. Rival Infosys is deploying more than 300 Agentic AI solutions, which deliver 5-15 percent productivity gains for clients.
Wipro has announced “AI-first delivery” programmes.
Also read: Wipro’s Agentic AI increases efficiency by 20-35% in software development, says CTO
But Chakkilam argues that Covasant’s advantage lies in its focus. Instead of building broad AI platforms, the company is going to create 20-25 revenue-yielding agents over the next two years, each aimed at a specific, high-value problem, from internal audit automation in BFSI to supply chain risk analysis in manufacturing.
One of these risk and compliance agents is already in use at more than 20 Fortune 500 firms, processing $1.4 trillion in transactions and recovering about $500 million in anomalies, the CEO said.
Also read: Indian banks spark AI gold rush as tech firms race to tailor language models, build agents
Rethinking the 'pyramid'
In the old offshore services benchmark, generating around $100 million in revenue would require 2,500-3,000 employees. Covasant’s goal? Deliver the same figure with half or less of that headcount, thanks to agents that can replace repetitive workflows across sales, recruitment, marketing and client delivery.
“Our previous benchmarks are changing,” Chakkilam said. “In some cases, you may need 10 people plus a few AI agents. In some, just two.”
Also read: India’s top IT firms lean towards IP-led growth as Gen AI shrinks the pyramid
If the numbers hold, Covasant could hit its over $250 million revenue goal within five years without ever building a workforce on par with legacy players, and with revenue per employee well above the industry average.
“Ultimately, the size doesn’t matter anymore. Whoever comes with the right solution for the customer that solves a business problem is the leader today,” Chakkilam said.
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