Cash Cows, Not Tech Leaders

Another Indian IT giant has pressed the same old button. One more buyback. Investors will clap politely, yet it is hard to ignore the deeper story. These firms are no longer seen as pioneers, only as careful custodians of cash. Instead of betting their billions on the technologies that could define the next decade, the big four keep mailing the money back to shareholders.

TCS has sprayed more than ₹1 trillion in dividends in just three years. Infosys solemnly promises to return 85% of free cash flow. HCL has given away almost all of its profits. Predictable, yes.

But predictable can also mean pedestrian.

The roots of this caution go back a long way. The outsourcing boom of the 1990s was hailed as a miracle. Train young engineers, rent them to the world, skim the margin. Shareholders made fortunes, a new middle class emerged, and the country gained a new swagger. Three decades on, the contracts are still vast and the margins decent. Yet the machine is the same. Hire more, bill more. Productivity has inched up, but the engine still runs on headcount rather than ideas.

Set that against what happens elsewhere. Microsoft throws more than 13% of revenue at R&D. Alphabet, Amazon, and Meta spend the same or more. Most of those bets misfire. A few turn into monopolies. Indian IT, by contrast, spends about 1%. That single digit explains why there is no Indian equivalent of Windows, Salesforce or the iPhone.

Defenders will insist this is the wrong comparison. These firms were never meant to be Silicon Valley. Their genius was process, not invention. And by that yardstick, they have done splendidly. TCS is more valuable than many of Accenture’s rivals put together. Infosys is a byword for reliable delivery. Millions of Indians owe careers to this sector. Investors, too, have lived well off its steady dividends.

But opportunity costs do not disappear just because the cheques keep coming. Artificial intelligence is rearranging everything from cloud infrastructure to cybersecurity. The companies that control platforms and algorithms will dictate tomorrow’s commerce. If Indian IT does not shift, it will end up as a subcontractor yet again. It was once during the age of the PC. It was again when the internet arrived. Buybacks are not a flex. They are an admission of timidity.

It is not that the cupboard is entirely bare. Infosys parades its Topaz AI suite. TCS talks up Ignio. Wipro has Holmes. Useful add-ons, certainly. But none of them carries the heft of a global category leader. They are seasoning, not the meal.

So the crossroads is clear. Carry on being the world’s most reliable service providers. Predictable cash, predictable mediocrity. Or dare to risk some of that cash on moonshots in AI, security or specialised software. The first path keeps investors happy today. The second may shape history.

For the moment, the choice is obvious. The latest buyback shows Indian IT would rather be a fattened cow than a restless pioneer. The market will cheer. Historians may yawn.