Corporate Venture Capital in Indian IT & AI

Corporate Venture Capital in Indian IT Industry due to AI Innovations

Artificial intelligence has forced a reckoning across global industries, but few sectors feel the tremors as sharply as Indian IT. For nearly three decades, India’s technology services giants prospered on a model that rewarded predictability, scale, and efficiency. Their focus was execution, not experimentation; stability, not speculation. As a result, one of the most strategic levers embraced by global technology companies — corporate venture capital (CVC) — never became a central pillar of Indian IT’s growth strategy.

This gap was easy to overlook when the industry’s growth curve was linear, demand stable, and competition familiar. Today, that comfort has vanished. AI has redrawn the competitive landscape so quickly that the old playbooks no longer apply, and the industry’s long-standing hesitation toward venture investing has started to look less like prudence and more like a structural liability. A sector that once led cost-driven transformation now finds itself racing to stay relevant in an ecosystem where innovation is coming from the outside, faster than ever before.

Global Tech Giants with CVC Arms

To understand why CVC matters now in a way it didn’t earlier, it helps to reflect on how global peers treated venture capital. For companies like Intel, Google, and Accenture, investing in startups has never been philanthropy—it is an early-warning system. CVC gives them access to frontier technologies before competitors even recognise the threat. It allows them to observe business model shifts as they take shape. And most importantly, it gives them the option to partner with, learn from, or acquire innovators at the right moment, not after disruption is already irreversible.

Indian IT grew without this muscle. The outsourcing boom delivered abundant returns without demanding deep innovation pipelines. Talent density, delivery efficiency, and client intimacy were enough to retain global trust. Startups rarely appeared on the radar as competitive risks. For years, this was true. Then came generative AI, and with it a tidal wave of change that few incumbents saw coming at this speed.

AI embraced by corporates at Speed

Unlike cloud computing or analytics—both of which took years to penetrate enterprise budgets—AI skipped the long adoption curve. It entered boardroom conversations before vendors had an offering. It reached pilot stages before many internal teams were even trained to understand the basics. And its promise of “doing more with less” shook the foundation of an industry built on large delivery teams and billable hours. Suddenly, the pyramid model that defined Indian IT’s economics looked vulnerable. Clients were no longer asking how technology could support processes—they were asking how AI could replace them.

This shift has already begun to reshape the competitive map. A wave of AI-first services companies has emerged, funded by venture capital firms that smell an opportunity to chip away at traditional IT territory. Many of these startups have been founded by leaders who once served inside India’s tech giants. Their agility and focus allow them to build offerings in weeks that would take incumbent organisations months to pilot. Meanwhile, Accenture, Deloitte, KPMG, and IBM—armed with robust venture engines—have been quietly deepening their ties with AI startups across the world.

This is where Indian IT’s historical distance from CVC becomes glaring. It’s not simply about missing investments. It’s about missing insight, missing influence, and missing strategic optionality.

Starting the VC game…

Some companies have begun bridging this gap. Wipro’s renewed commitment to venture investing—infusing USD 200 million this year—signals a recognition that CVC is no longer optional. It is notable that Wipro has also been the most consistent player in this space, having invested in more than forty startups, exited fifteen, and integrated their solutions across hundreds of client engagements.

Infosys, too, has participated in the venture space, though its journey has been more uneven. The fund expanded rapidly during Vishal Sikka’s tenure, only to unwind several bets afterward. Some exits were painful, and some came too early. Yet Infosys continues to deploy capital into deep-tech startups and venture funds globally, recognising that the ecosystem offers vantage points internal R&D cannot match.

TCS and HCL, on the other hand, have chosen structured partnership models over equity involvement. These partnerships certainly open doors to innovation, but they rarely offer the strategic depth and influence that equity ownership provides. A startup plugged into a partnership network is fundamentally different from a startup that the company has a stake in, mentors closely, and shapes alongside its product leaders.

Even with these efforts, Indian IT’s presence in the global innovation arena remains modest. In Silicon Valley, venture capital partners often say that Indian IT is “interested but invisible”—an observer rather than a participant. When Indian IT firms do show up in deal flows, they sometimes seek more control than startups are willing to part with, or they arrive too late, after global strategic investors have already taken the prime seats.

There is also an underlying philosophical disconnect. Startups move with speed, messiness, and ambiguity—traits that clash with the operational precision of legacy IT. Where founders need flexibility, IT majors often demand predictability. Where startups seek independence, IT giants sometimes expect integration. This mismatch has cost Indian IT access to promising opportunities, as seen in the case of LYZR.ai, where the founder declined a USD 15 million offer from a large Indian IT firm due to strategic misalignment, even as Accenture and FirstSource moved swiftly to invest.

Moving ahead

Despite these challenges, the path forward is neither obscure nor complicated. Indian IT needs a fundamental shift in how it views venture capital—not as a side initiative, but as a core part of its strategy.

First, the industry must be willing to deploy real capital. Small, symbolic pools of money rarely win meaningful deals or influence product roadmaps. Global CVC arms don’t operate with USD 5 million funds; they play bold, knowing the returns—strategic or financial—justify the risk. Second, decision-making needs to become faster and bolder. If an investment committee needs six months to evaluate a startup, the opportunity is already lost. In the AI world, a six-month delay is the difference between early access and late adoption.

Third, sales incentives must evolve. Even when IT companies invest in startups, the partnership often loses momentum because sales teams gain little from pushing a small, unproven solution over larger, established offerings. Unless sales incentives reflect startup integration, innovation will stay trapped in showcases rather than reaching clients.

Fourth, venture investments must translate into genuine collaboration, not just press releases. Clients increasingly want to see real co-development, shared accountability, and integrated delivery frameworks—not superficial partnerships that exist only on slides. Indian IT must embed startups into its core delivery mechanisms, allowing them to influence solutions, accelerate modernization, and sharpen differentiation.