Speaking to ET Now, K Krithivasan, CEO and Managing Director of Tata Consultancy Services, said the positive trend first noticed in the second quarter has continued into Q3 and is expected to carry into Q4.
“While caution remains, clients are now more decisive where they see value and ROI. That optimism has sustained through Q3 and should continue into Q4 if returns hold up,” Krithivasan said.
AI demand accelerates across verticals
Executive Director, President and COO Aarthi Subramanian said discretionary spending has not broadly rebounded, but specific areas—especially artificial intelligence—have seen a clear uptick.
“Compared with Q2, the number of AI-led projects executed in Q3 has increased. We are seeing demand pick up in specific pockets,” she said.
Krithivasan noted that AI engagement has deepened across TCS’ client base, with 54 of the company’s top 60 clients already running projects with AI embedded. More than 85–90% of clients generating over $20 million in annual revenue are now working with TCS on AI adoption.
TCS’ AI portfolio is currently valued at about $1.8 billion, with nearly 20% quarter-on-quarter growth, and management expects this momentum to continue.
Full-stack AI strategy underpins growth
Krithivasan rejected the view that Indian IT lacks a credible AI play, outlining TCS’ ambition to become the world’s largest AI-led services company.
“This quarter, we unveiled our full-stack AI strategy—from infrastructure to intelligence. We can support customers across multiple layers, whether it is building AI data centres, developing models, creating agentic platforms or deploying enterprise-wide solutions,” he said.
Subramanian added that TCS is proactively helping clients identify, implement and scale high-impact AI use cases through “innovate with AI” sessions, accelerating production deployment timelines.
Margins managed through delivery efficiency
Addressing concerns about margin pressure amid heightened competition and cost-takeout deals, Krithivasan said TCS remains competitive at the deal level but manages margins at a portfolio level.
“We don’t impose margin thresholds at the project level. Our differentiation comes from efficient delivery, productivity gains and pyramid optimisation after we win the deal,” he said, adding that pricing has remained stable to slightly positive.
Revenue growth broad-based; BSNL impact limited
TCS reported 0.8% constant-currency growth quarter-on-quarter, with around 30 basis points coming from international markets and 50 basis points from domestic business, reflecting typical Q3 seasonality. Krithivasan clarified that the BSNL deal was largely flattish and did not materially drive growth.
Outlook: cautious optimism
On the US market, Krithivasan said clients remain selective rather than fully discretionary, with decisions driven project-by-project based on payback periods. Still, overall decision-making has improved compared with previous quarters.
While stopping short of reaffirming formal guidance, Krithivasan said TCS continues to aspire to deliver higher international revenue in FY26 than FY25, with AI-led services expected to remain a key growth engine.