India’s TCS tops estimates, says new AI models did not dent services demand

By Haripriya Suresh and Sai Ishwarbharath B

BENGALURU, April 9 (Reuters) – Tata Consultancy Services reported better-than-expected quarterly results on Thursday and said that new artificial intelligence models and tools in the market did not hurt demand for its offerings.

The comments from India’s top software-services exporter offered some relief to the $315 billion sector, which has been grappling with investor concerns that AI could disrupt its traditional, labour-intensive business model.

“FY26 was a pivotal year for enterprise AI adoption across industries. For the first time since the advent of generative AI in late 2022, the shift from experimentation to scaled AI deployment showed a marked improvement,” TCS Chief Operating Officer Aarthi Subramanian said.

TCS, which also provides AI services to its clients, said its annualised AI revenue crossed $2.3 billion in the fourth quarter, driven by accelerated deployments across industries, up from $1.8 billion in the third quarter.

Some analysts were, however, not impressed with the number. “It is pretty minuscule,” said Anshul Jethi, analyst at LKP Securities, comparing it to the size at which TCS is currently operating right now and its future AI plans. Others said TCS still had ground to cover on the AI front.

“TCS is not behind, but it is not yet leading. The next 12 to 24 months will depend on whether it can move from AI capability to AI-led business models that scale beyond pilots and into core client operations,” said Phil Fersht, CEO of IT advisory firm HFS Research.

It is the first major Indian IT company to report fourth-quarter results. Rivals Infosys, Wipro and HCLTech are set to report later this month.

TCS reported a 9.7% rise in sales to 706.98 billion rupees ($7.63 billion), and a 12.2% jump in net profit to 137.18 billion rupees ($1.48 billion) in the quarter. 

Analysts had expected sales of 694.94 billion rupees and a net profit of 136.46 billion rupees, according to data compiled by LSEG.

“Every revenue band saw a healthy addition this quarter after a gap of about two years. This speaks to the early signs of stability and growth returning to our mid-size and large accounts,” TCS CEO K Krithivasan said.

Revenue from North America, which accounts for nearly half of TCS’s revenue, grew 2.5% in the fourth quarter.

The company’s quarterly order book stood at $12 billion, compared with $9.3 billion in the third quarter and $12.2 billion a year earlier.   

($1 = 92.6575 Indian rupees)

(Reporting by Haripriya Suresh and Sai Ishwarbharath B in Bengaluru; Editing by Nivedita Bhattacharjee, Dhanya Skariachan and Shinjini Ganguli)