Bengaluru: reported quarterly profit that topped analysts’ estimates, helped by cost-cutting measures and a gradually improving contract flow that helped drive growth at Asia’s largest IT services provider.
Net profit rose 15% to ₹13,884 crore ($1.4 billion) in the three months through September, the company said in a statement on Thursday. Analysts expected ₹13,786 crore on average. Revenue climbed 11% to ₹73,188 crore, helped by a decline in the Indian rupee versus the dollar and the euro.
TCS’ major customers in the US and Europe and remain cautious with large IT projects, with geopolitical tensions and elevated inflation weighing on economic growth. At the same time, AI threatens to disrupt the traditional outsourcing business model of TCS and Indian peers such as Infosys Ltd.
As AI tools from OpenAI Inc. and Anthropic PBC begin to reshape how clients procure software services, TCS’ traditional recipe for success—hiring armies of graduates to write code for clients such as Apple Inc., Boeing Co. and Bank of America Corp.—is under pressure. While the company has sought to harness AI for its own purposes, investors remain skeptical—the stock has lost half its value over the past two years.
TCS has also embarked on a massive cost-cutting drive. N. Chandrasekaran, chairman of TCS parent Tata Group, predicted in June that . But he was also quick to add that AI will open up fresh opportunities.
Mumbai-based TCS has also rapidly expanded its AI operations, saying annualised AI revenue reached $3.1 billion in the quarter. Examples include two recent deals with AI components: earlier this month, TCS announced it will bring US consumer electronics retailer Best Buy Co.’s India global capability centre into its fold. In August, for deploying AI, while also agreeing to buy its consulting unit.
The agreements with Porsche and Best Buy “represent a new category of transformation partnerships,” Chief Executive Officer Krithi Krithivasan said in a statement. “Together with our clients, we are building repeatable value platforms that will industrialise AI at scale.”
and is in similar discussions with other tech giants. India is expected to need about 10 gigawatts of AI data centre capacity over the next four years, and much of that is yet to be built. TCS is seeking to capitalise on the opportunity, Krithivasan has said.
India’s $280 billion software services sector, led by TCS, began by offering cheap back office solutions to large international corporations, but they now provide a range of cloud, automation and AI services to multinationals including Citigroup Inc. and PepsiCo Inc. That’s made the Indian IT giants direct rivals to global technology services providers from Accenture Plc to International Business Machines Corp.