As manufacturers increase their AI investments, the focus is shifting from standalone automation projects to larger physical AI ecosystems said Tata Consultancy Services (TCS) in it’s Physical AI Readiness Report 2026.
Market Context
The company on Wednesday (July 23, 2026) released the findings of the Future-Ready Manufacturing report which highlights that companies see physical AI as a people-first transformation.
“Instead of replacing the workforce, manufacturers are using intelligent systems to help employees work more safely, efficiently, and productively while supporting workforce redeployment where needed in a Human + AI Operating model,” the company said in the report.
As per the report enterprises are preparing to scale physical AI across factories, warehouses, logistics networks, maintenance operations, and quality management environments.
“Physical AI adoption in manufacturing remains at an early and uneven stage. Sixty-eight percent of manufacturers report either no active deployment or only experimental activity, and just 9% have successfully scaled pilots into operations,” as per the report.
Strategic commitment is similarly mixed. While 25% identify Physical AI as a core priority or major initiative, 36% say it is not currently a priority.
The findings show that manufacturers will not close this gap through technology investment alone.
“Data integration, legacy modernisation, workforce capability, governance, and clearly defined accountability will determine whether promising pilots become repeatable, enterprise-scale deployments,” TCS said in the report.
“This creates a valuable window for manufacturers to build the foundations for scale while the market continues to mature.The competitive question is therefore not who experiments first, but who builds the readiness to scale successfully,” it said.
The study surveyed CXOs and vice presidents from 300 manufacturing companies across North America and Europe between March and April 2026. Respondents represented sectors such as automotive, electronics and high-tech manufacturing, industrial equipment and machinery, process industries, and aerospace and defence.
As per the findings manufacturers are committing to long-term investment and no surveyed organisation plans to reduce Physical AI investment, while 26% plan to increase spending. Manufacturers are preparing for longer value-realization timelines, underscoring sustained transformation over short-term pilots.
According to the findings human-centric transformation is taking shape. 42% of manufacturers expect significant workforce augmentation through Physical AI by improving safety and supporting workers in complex, hazardous, or repetitive industrial environments.
Anupam Singhal, President, Manufacturing, TCS, said, “Physical AI is taking intelligence beyond the screen and onto the shop floor, where machines sense, adapt and act in real time. The manufacturers that scale it successfully will define the next era of manufacturing.”
“TCS’ ‘infrastructure to intelligence’ approach positions them to lead that transformation. With all the manufacturers in our study planning to either maintain or increase the investment, the direction is clear: towards more resilient, adaptive, and future-ready manufacturing enterprises,” he added.
Kevin Ichhpurani, President, Global Partner Ecosystem, Google Cloud, said, “Physical AI is moving manufacturing from digital insight to autonomous real-world action. Through our partnership with TCS, we are bringing Gemini’s multimodal reasoning to the factory floor, enabling robots and systems to operate safely and intelligently in complex industrial environments.”
TCS is helping global manufacturers move from pilots to enterprise-scale physical AI adoption by bridging the gap between digital ambition and physical deployment. This is enabled through the TCS Physical AI Gemini Experience Center, in Troy, Michigan.
Future Forecast
Expectations for widespread deployment vary considerably. While 25% anticipate adoption across most major sites within three to five years, 35% expect it to take at least six years and 32% remain uncertain, it pointed out.
“Manufacturers that connect Physical AI with trusted data, modern infrastructure, empowered people and responsible governance will be positioned to create more resilient, adaptive and future-ready enterprises,” it emphasised.
High impact is expected in warehouse operations and 77% anticipate significant or transformational impact, followed by assembly and manufacturing operations at 75% and logistics and material movement at 72%.
