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What explains TCS, Wipro, Infosys, TechM flocking to Nvidia
Summary
Nvidia is solidifying its position in the AI space through partnerships with major IT services companies, including TCS and Infosys. These collaborations allow firms to integrate Nvidia's AI technologies, driving mutual growth amid increasing demand for AI solutions.
India's top tech services companies are riding the AI wave with chip giant Nvidia, betting on mutually beneficial partnerships like the ones they have with software giants SAP AG and Oracle Corp.
Tata Consultancy Services Ltd (TCS), Infosys Ltd, Wipro Ltd and Tech Mahindra Ltd last week announced or expanded on their partnerships with Nvidia, when its founder and chief executive Jensen Huang visited India. While TCS has launched a new business unit in collaboration with Nvidia for industry-specific AI solutions, Infosys unveiled two small language models trained on specific data sets for clients based on Nvidia’s platforms. Wipro announced readymade AI-based templates for clients based on Nvidia’s AI platforms, while Tech Mahindra launched a centre of excellence powered by Nvidia platforms to help clients adopt enterprise AI models.
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Earlier this month, Accenture Plc, the world’s biggest software services provider, launched the Nvidia business group, under which 30,000 of its employees would be trained to help clients scale enterprise AI adoption based on Nvidia platforms.
All want their chips
“IT services companies are partnering with Nvidia because everyone wants their chips, which are basically their graphic processing units (GPUs). Fortune companies know that Nvidia’s chips work best when embedded in Nvidia’s own software and platforms, and they want to use this package as part of their AI workstreams," said an analyst at a domestic brokerage on condition of anonymity. “This is why these companies are using IT service providers as system integrators."
The scramble for AI partnerships with AI comes at a time of uncertainty over the technology's industry-wide deployment, almost two years after the launch of ChatGPT sprang Gen AI to boardroom discussions.
Apart from its mainstay AI chips, some of Nvidia's offerings include Nvidia AI Foundry, Nvidia Omniverse and Nvidia AI Enterprise, all designed to help clients integrate AI into their work. While Nvidia Omniverse helps developers build 3D applications and services, AI Foundry helps build custom Gen AI models. Nvidia AI Enterprise is a cloud-native software platform.
According to a second analyst, these partnerships also help Nvidia build its ecosystem.
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“This is a win-win for both (IT services companies and Nvidia). IT services can get more business leveraging the growing demand of Nvidia’s chips and AI platforms from their clients, and Nvidia will be expanding its ecosystem by partnering with more IT services companies as system integrators," a Singapore-based analyst on condition of anonymity.
Both analysts agreed that these partnerships were akin to similar tie-ups with SAP and Oracle. IT services companies customize and integrate software from SAP and Oracle in their clients’ systems, which help large companies manage human resources, accounting systems and supply chain management.
“This is just like what IT services companies did with SAP and Oracle partnerships where service providers were system integrators of the software the two companies (SAP and Oracle) had to offer," said the Singapore-based analyst.
A name for chip design
Nvidia made its name for designing a computer chip widely used in video games, since they could render visuals efficiently. However, its secret sauce was the chips capable of handling complex computing demands, along with software that AI processes require. Nvidia, which was worth $275 billion just before the launch of ChatGPT, is now worth $3.47 trillion, briefly overtaking Apple Inc. on Friday to become the world’s most valuable company.
“While its competitors are investing in building out their own infrastructure stack, Nvidia is still miles ahead of the rest of the market and commanding the attention of ambitious service providers keen to develop their AI transformation capabilities," said Phil Fersht, chief executive officer of US-based HFS Research, an outsourcing research firm.
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Nvidia gets most of its revenue from the data centre market, which fetches 87% of its overall revenue. In the quarter ended July 2024, Nvidia reported a revenue of $30 billion, up 15% sequentially. To put this in perspective, Nvidia makes as much revenue in a quarter as TCS, which is India’s largest software services company, makes in a year. Nvidia’s data centre business includes its chip business, cloud-based solutions, and other computing platforms.
While TCS claims to have trained over half of its 600,000-strong workforce in AI, machine learning and Gen AI, Infosys claims to have trained more than three-fourths of its workforce in Gen AI skills. Still, both companies, which are India’s two largest software services companies, have not disclosed the business they get from GenAI.
