India's TCS posts slim quarterly revenue beat on AI demand, North America growth
FILE PHOTO: A man walks past a logo of Tata Consultancy Services (TCS) before a press conference announcing the company's quarterly results in Mumbai, India, January 11, 2024. REUTERS/Francis Mascarenhas/File Photo
BENGALURU, Jan 12 : India's Tata Consultancy Services on Monday posted a third-quarter revenue marginally above estimates on AI-driven demand, with revenue from its key North America market registering growth for the first time in two years.
Artificial intelligence-led tech spending boosted growth for the Tata Group firm in a traditionally weak quarter, with AI services generating $1.8 billion annually and making up about 5.8 per cent of total revenue.
"Based on the client conversations, strong deal momentum and the leadership we are gaining in AI, we are confident of a good calendar year 2026," said K Krithivasan, chief executive during a post-earnings analyst call.
Clients of India's $283 billion IT industry, however, remain cautious about tech spending due to growth concerns in the world's largest economy, with macro headwinds like uncertainty over U.S. tariffs and proposed $100,000 visa fees further weighing on the sector.
"The North America market has risen as the demand slowdown has bottomed out but we expect a gradual recovery as structural weakness continues," said Ambarish Shah, analyst, Systematix.
The region, accounting for nearly half of the firm's revenue, grew for the first time since July-September 2023, with five out of eight regions growing, led by Middle East and Africa at 8.3 per cent and Continental Europe at 3.5 per cent.
The company also said tepid numbers in banking and financial services, and retail segments were due to the year-end seasonality impact and expected recovery from the ongoing quarter.
Consolidated revenue for India's largest software services firm rose 4.9 per cent to 670.87 billion rupees ($7.44 billion) in the quarter ended December 31.
Analysts had expected 666.76 billion rupees, as per data compiled by LSEG.
The Mumbai-based firm's quarterly net profit fell 14 per cent to 106.57 billion rupees, missing analyst estimates of 130.24 billion rupees. TCS attributed this to one-time restructuring costs associated with layoffs, the impact of India's new labour codes enacted in November 2025 and other legal costs.
TCS's total order book stood at $9.3 billion in the quarter, down from $10.2 billion a year ago.
The company declared a dividend of 11 rupees per share as well as a special dividend of 46 rupees per share. Its Mumbai-listed shares closed 1.3 per cent higher ahead of the results.
($1 = 90.1660 Indian rupees)
