TCS delivered a quarter marked by sequential and year-on-year growth, driven by strong deal closures and accelerating artificial intelligence (AI) metrics, despite sustained geopolitical and macroeconomic uncertainties. Operating margins faced a sequential headwind due to annual wage increments.
Financial Performance
- Revenue: Stood at ₹72,275 crore, representing a 2.2% growth sequentially and 13.9% growth year-on-year (YoY). In USD terms, revenue was $7,624 million (flat sequentially, up 2.7% YoY).
- Operating Margin: Stood at 24.0%, down 130 basis points sequentially, primarily impacted by a 170-basis-point hit from annual wage increments. This was partially offset by 40 basis points of currency benefits and operational efficiencies.
- Net Margin: Reported at 19.2%.
- Cash Flow & Funds: Days Sales Outstanding (DSO) was 74 days in USD terms. Capital conversion remained high at 93% of net income, with invested funds at $5.3 billion at the end of the period.
Order Book & Major Deal Wins
TCS secured a Total Contract Value (TCV) of $9.5 billion during the quarter. Key highlights include:
- A landmark $800 million mega deal with SKF to transform its infrastructure, applications, and business processes into an AI-native enterprise.
- A strategic partnership agreement with ServiceNow.
- A multi-million-dollar deal with a Europe-based Fortune Global 500 company.
AI Capabilities and Partnerships
The AI services revenue pipeline continues to accelerate, ending the previous fiscal year at a $2.6 billion annualized run rate (up 13.6%).
- Anthropic Partnership: Announced a global premier partnership providing early access to Claude models, 50,000 licenses, and co-creation of industry solutions.
- Mistral AI Partnership: Became the first Global System Integrator (GSI) partner for Mistral AI to build custom and sovereign AI models.
- Agentic AI Deployment: Agentic AI is increasingly being used to orchestrate IT operations and business processes. For example, a large retailer deployed 70 agents to handle IT operations, resulting in 30% faster remediation.
Human Resources & Workforce Metrics
- Total Workforce: Headcount stood at 593,798 at the end of the quarter.
- Compensation & Compliance: Completed the annual salary increment cycle globally and aligned India associates’ salary structures with the new India Labor Code requirements.
- Training and Development: Employees logged 14.6 million learning hours in Q1, achieving over 1.3 million competencies. More than 50% of lateral hires already possess next-generation technical skills.
Industry and Segment Outlook
- Growth Leaders: BFSI, Technology Software & Services, and Regional Markets led the growth momentum.
- Soft Segments: Life Sciences & Healthcare experienced a temporary decline but expects recovery. Manufacturing faces cautious discretionary spending in automotive due to tariff pressures and EV recalibrations, though cushioned by long-term deal wins like SKF.
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