* CEO Krithivasan says the FDE group would equal 1% to 1.5%

of associates

* TCS is evaluating acquisitions in AI, data security and

cybersecurity

* Quarterly annualised AI revenue growth decelerated to 13%

from 28% previously

By Sai Ishwarbharath B and Haripriya Suresh

BENGALURU, July 12 (Reuters) - Tata Consultancy Services

is building a team of up to 8,900 forward-deployed

engineers and hunting for AI acquisitions as it bets artificial

intelligence will create new business rather than undermine

outsourcing, two TCS executives told Reuters.

The strategy emerges amid investor concern that AI could

disrupt India's $315 billion IT services industry by reducing

demand for engineering teams, shortening project timelines and

squeezing prices as clients seek a share of productivity gains.

"We would be ... ensuring that we have as many as 1% to 1.5%

of our associates who could be what you would call FDEs," CEO K

Krithivasan said in an interview. TCS is India's

largest software services firm.

Krithivasan's figures would translate to roughly 5,900 to

8,900 employees based on TCS's end-June headcount. Krithivasan

did not say whether the company would hire externally or retrain

existing staff.

Forward-deployed engineers embed with clients to accelerate AI

adoption and tailor tools to business needs, a role that has

emerged as a hiring bright spot in a sector grappling with

AI-driven efficiency gains.

The plan pits TCS against firms such as OpenAI, Anthropic and

Microsoft ( MSFT ), which have expanded hiring for

forward-deployed engineers to help clients deploy AI tools.

The Mumbai-based company is also evaluating acquisitions in

AI, data security and cybersecurity, after largely shunning

acquisitions for years and relying instead on organic growth

until late 2025.

"We are looking at where we can find things which will help

us enable or enhance our strategic positioning," CFO Samir

Seksaria said.

AI: FRIEND OR FOE?

Krithivasan dismissed concerns that AI would disrupt the

outsourcing model, arguing that companies still need partners

such as TCS to integrate and deploy AI systems.

"What you need is a deep knowledge of the customer

environment to make it work. That is where we differentiate

ourselves. This has nothing to do with cost arbitrage. It's

essentially because of the talent pool that we have built,"

Krithivasan said.

Companies increasingly use multiple AI models and require

partners such as TCS to connect those models with existing

systems and manage data flows, he said.

Even so, TCS's annualised AI revenue growth slowed to 13% in

the first quarter from 28% in the previous quarter. Krithivasan

said he would like the business to grow about 25%

quarter-on-quarter over the long term but that he did not expect

a linear trajectory.

TCS spends about $1 billion annually on talent development

and making AI accessible internally, with a focus on training,

targeted hiring and niche recruitment in AI-native technologies,

Seksaria said.