India's information technology (IT) services companies are facing a shift in client expectations as artificial intelligence (AI) reshapes business models.
From the world’s largest banks to retail majors, customers now increasingly prefer engineers who combine AI expertise with sales and consulting skills to drive end-to-end deployment of the new technology, even as this shift raises costs for the country’s largest tech services firms.
Homegrown IT services companies have traditionally worked with a simple business model. Under this, a third of their engineers were typically stationed in client locations such as in the US and Europe and commanded higher pay packages, whereas the remainder functioned remotely from cheaper locations such as India.
Over the past few years, tech services firms have steadily shifted employees to remote locations away from their clients’ offices to reduce salary bills and increase profitability.
However, the rise of AI-enabled automation tools is prompting a rethink of this earlier model.
Companies are now asking IT vendors’ employees to relocate and work from their offices and are also empowering them to take decisions relating to engineering, consulting, and sales in a bid to reduce the time taken for tech transformation.
“They are in demand because enterprises have realized AI adoption is not just about deploying models, it is about redesigning workflows, integrating fragmented data, and driving measurable business outcomes. Forward deployed engineers (FDEs) bridge the gap between AI capability and enterprise execution,” said Phil Fersht, chief executive of HFS Research.
Not the same thing
Still, these FDEs are not the same as on-site engineers.
“FDEs act as product managers, engineers with AI expertise, and consultants at the same time. They are domain experts and they understand the business of their clients. Earlier, the consultant would advise the clients on the tech changes and the engineer would implement it. Now, these are all combined into one role,” said Amit Chandra, vice-president at HDFC Securities.
On Monday, Cognizant became the second large Indian IT firm after Infosys to launch two new job roles: frontier certified engineers and frontier business operators.
While frontier certified engineers figure out and redesign areas where automation can change business processes, frontier business operators run those redesigned processes on a daily basis, managing a mix of human workers and AI agents to deliver results.
“The (employee) pyramid was built for a pre-AI world. Frontier certified engineers who design for agentic outcomes and the frontier business operators who own them are a new kind of professional, trained from day one to turn AI capability into business reality. The most important innovation of this decade will not come from AI. It will come from empowering every worker to use it,” said Thirumala Arohi, head of learning and development at Cognizant, in a company statement on 1 June.
Cognizant’s move comes almost two months after Bengaluru-based Infosys’s management threw light on the same.
“We are building the forward deployed engineer team, which is being done to make sure that we can do more work directly with clients on business and tech, which is AI tech to make the AI solutions,” said Salil Parekh, chief executive of Infosys, during the company’s post-earnings press conference on 23 April.
Parekh added that Infosys has set different starting salaries for candidates with varying skill sets, with better pay for those more attuned to AI.
Urgent measure
For now, this push towards FDEs seems more like an urgent measure as AI-native companies have also ramped up hiring for such engineers.
Last month, OpenAI launched the OpenAI Deployment Company (DeployCo) with an initial investment of over $4 billion from 19 global partners. The mandate is to embed AI inside the clients’ software through engineers who could identify AI-specific opportunities, re-design workflows, and deploy AI tools. This means that these AI firms will compete against homegrown software services firms for tech contracts.
While some IT services firms are focusing on building their own FDE teams, India's third-largest IT services firm HCL Technologies is making use of its partnerships with OpenAI’s forward deployed engineers to help clients use AI in their business.
Cognizant, which follows a January-December financial calendar as against Indian IT’s April-March calendar, ended last year with $21.1 billion in revenue, up 7%. On the other hand, Infosys and HCLTech reported $20.16 billion and $14.66 billion in revenue last year, up 4.6% and 6%. respectively.
According to experts, the demand for candidates with diverse skill sets is expected to strain the profitability of IT firms as such engineers demand higher salaries.
“In the short term, it can pressure margins because these engineers are expensive and scarce. However, over time they can improve profitability if they help providers move toward higher-value AI transformation work, platform-led services, and outcome-based pricing,” said Fersht.
He added that companies want smaller, highly skilled teams that can deliver AI-led business outcomes instead of large-scale, labour-based delivery models.
Cognizant reported operating margins of 16.1% in calendar 2025, up 140 basis points. On the other hand, Infosys and HCLTech reported operating margins of 20.3% and 17.2% in FY26, down 80 basis points and 110 basis points, respectively.
Another expert said the demand for such on-site engineers is expected to rise.
“FDEs are deployed on agentic native platforms. These are still nascent and the Indian IT services firms are attempting to establish them and join this lucrative market. They bill out at a very high rate and are margin-dilutive,” said Peter Bendor-Samuel, founder of the US-based consulting firm Everest Group.
