Company bets on digital, AI-led transformation despite global macro uncertainties
Tata Consultancy Services (TCS) reported a 3.3% sequential and 3.1% year-on-year revenue decline in Q1 FY26, driven by global uncertainties, delayed client decisions, and the BSNL contract wind-down. However, rupee revenue rose 1.3% YoY to ₹63,437 crore. Net profit stood at ₹12,760 crore with margins expanding 30 basis points to 24.5%.
Despite muted revenue, the company remains bullish on FY26 growth, citing a robust deal pipeline worth $9.4 billion and strong traction in North America. CEO K. Krithivasan emphasized the company’s long-term growth focus amid macro volatility: “The underlying tech demand is strong. Clients are cautious, but committed.”
AI, Cybersecurity & Cloud Drive Future Bets
AI and digital modernization emerged as key growth engines. TCS reported increasing enterprise adoption of AI for application modernization and industry-specific solutions. Its AI platforms, like TCS WisdomNext and Sovereign Cloud, are gaining traction, while 114,000 associates are now skilled in advanced AI capabilities.
The company is also building “Agentic AI” solutions and co-innovation platforms with global clients. Business process automation using GenAI is expanding across sectors. Cybersecurity and cloud modernization were other fast-growing verticals, reflecting rising enterprise demand for digital trust and cost efficiency.
Talent, Costs & Strategy
TCS added 5,000 employees in the quarter, taking its workforce to 6.13 lakh, even as attrition crept up to 13.8%. Wage hike decisions are pending, while the company reiterated its commitment to fresher onboarding.
CFO Sameer Seksaria said improved profitability was aided by reduced third-party expenses and forex gains. TCS is open to acquisitions for AI and digital capabilities, primarily through its 3,000+ startup innovation partners.
Outlook
TCS expects international revenues to surpass FY25 levels. While Q2 recovery will depend on macro clarity, the firm remains optimistic, banking on AI, cloud, cybersecurity, and digital transformation to lead its next growth cycle.