Indian IT firm’s $1.5 billion deal with Porsche is powered by AI
Germany’s Porsche has signed a $1.5 billion deal with India’s largest IT services company as the luxury carmaker looks to leverage AI to make itself more competitive in a fast-changing industry.
It gives Bengaluru-based Tata Consultancy Services, which employs close to 595,000 people, a foothold in the European automotive industry as it changes focus from the traditional headcount-based outsourcing model to one defined by measurable results and productivity targets.
The 5-year strategic partnership with Porsche will go into effect once TCS completes the acquisition of Porsche’s IT consulting business, MHP, for €320 million ($373 million).
It is a win-win for two companies from two industries that are swiftly being upended by artificial intelligence.
The automotive industry is among the most disrupted by digital technology as cars increasingly become software on wheels, and with AI accelerating the evolution of technologies like self-driving through systems that learn from real-world data.
TCS will establish a dedicated AI Mobility Centre of Excellence for Porsche, to apply AI across engineering, manufacturing, operations, and customer experience as the car maker doubles down on its core business by shedding MHP – part of its ‘Sportwagenschmiede 35’ strategy, which aims to improve profitability and cash flow.
Porsche recorded about $40 billion in revenue in FY2025.
TCS will “industrialize AI at scale for Porsche,” said the IT firm’s CEO K. Krithivasan.
AI has also become a major source of worry for Indian IT consultancy companies, which have built a multi-billion global success story, with margins coming under pressure as clients demand increased productivity from AI deployments.
The Nifty IT index, a benchmark for Indian IT stocks, is down nearly 20% from the beginning of the year, compared to just 7% for the broader Nifty 50 – an indication of how investors view Indian IT’s prospects.
However, with MHP, which already has a bunch of automotive clients including Porsche, TCS gets deeper access to the European, particularly German, auto market. And it gets an existing business to scale leveraging its AI/IT capabilities, alongside building deep skills in automotive consulting.
TCS recorded $30 billion revenue in the financial year ended March, and analysts expect MHP to add 3% to its top line.
In short, TCS gets Porsche’s technology transformation business, MHP’s automotive expertise, and a platform to grab more business from global auto manufacturers.
