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Informist, Thursday, Oct. 9, 2025

 

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--TCS: Sales momentum remains robust across industries, markets 
--CONTEXT: Comments by TCS management in post-earnings analyst call 
--TCS: Seeing success in many large deals 
--TCS: Committed to make significant investments on transforming co 
--TCS: Deepening partnerships in AI ecosystem 
--TCS: IT services segment going through significant changes 
--TCS: Q2 operating margin excludes restructuring expenses of INR 11.35 bln 
--TCS: Focused on internal transformation; building AI-first culture 
--TCS: Global businesses increasingly experiencing cyber attacks 
--TCS: Aim to become world's largest AI-led technology services co 
--TCS: Provided INR 10.35 bln as severance pay in Jul-Sept 
--TCS: Continue to nurture employees, recruit future-relevant skills 
--TCS: Offered better severance package to employees 
--TCS: 1 GW AI data centre to come up in phases 
--TCS: To achieve 1-GW AI data centre capacity in 5-7 years 
--TCS: Cyberattack delayed some projects at customer end 
--TCS: Demand for data centres to grow 10 times in 5-6 yrs in India 
--TCS: Seeing significant opportunity in AI-powered modernisation in BFSI 
--TCS: FY26 international revenue in constant currency seen better than FY25 
--TCS: Continue to evaluate employees who are not deployed 
--TCS: Will let go of employees who are not getting deployed 
--TCS: Do not have target for job cuts, will continue to assess staff 
--TCS: No significant improvement in smaller, short-term deals 
--TCS: Speaking with multiple partners for funding AI data centre 
--TCS: Actively looking for acquisition opportunities

 

By Anjana Therese Antony and Narayana Krishna

 

MUMBAI/HYDERABAD – The management of Tata Consultancy Services Ltd. Thursday said it will release middle- and senior-level employees who are not able to find the right role based on their seniority. "...we're not chasing a target (of layoffs). We continue to evaluate everyone (employees) after all the investment in learning and development that we've done," the management said in a conference call with analysts after announcing earnings for Jul-Sept. The management's comments come after the information technology giant announced plans to let go of 2% or around 12,000 of its employees.

 

During the September quarter, the company incurred a one-time restructuring cost of INR 10.35 billion as severance payment. "The severance package is much better than industry standards. We approach this whole exercise with empathy and care," the company said. The company is also providing employees affected by layoff with benefits, counseling, and out-placement support for the transition.   

 

The IT behemoth said it continues to nurture employees and recruit future-relevant skills required for its growth across all markets. "We continue to be a net job creator." The company also said its operating margin of 25.2% in the September quarter excludes restructuring expenses of INR 11.35 billion. Its total employee headcount at the end of the quarter declined to 593,314 from 613,069 a quarter ago, a reduction of over 19,700 employees.

 

Speaking about the recent cyberattack at one of its clients, the management said it expects the project to pick up in the coming weeks. Though the company did not specify the client, Tata Motors Ltd.'s UK-based subsidiary is a customer of TCS which suffered a cyberattack in early September and faced temporary closure of its production units. In September 2023, TCS had got an order from Jaguar Land Rover to transform its digital infrastructure and build a new technology architecture over five years. The TCS management also said global businesses are increasingly experiencing cyberattacks. 

 

TCS said it is actively looking at more opportunities for acquisitions. "We also have stepped up our efforts in pursuing acquisitions to enhance our capabilities including high-end services, intellectual property, and market presence." On Thursday, the company said it will buy US-based marketing agency ListEngage MidCo and its subsidiary ListEngage for up to $72.80 million.

The Mumbai-based IT player expects revenue from international business to be better in 2025-26 (Apr-Mar) than FY25 in constant currency terms. It also said sales momentum across industries and markets remains robust and that it is seeing success in large deals. However, there is no significant improvement in the number of short-term or smaller projects compared to larger ones, it said. 

 

US WOES

The company said the IT services segment is going through significant changes and clients are keeping a tight control over their discretionary spending amid the uncertainties around US policies. "IT services spend is steady with no significant change expected in near term. Lingering uncertainties in the broader economic environment continue to remain a key challenge," it said.

 

IT clients, particularly in the US, have been keeping their budgets tight due to US President Donald Trump's policies related to trade, tariff, and immigration. Commenting about the H-1B visa, the company said it has "significantly localised" its workforce in the US. "Approximately 500 associates have traveled to the US on H-1B," the management said. TCS believes its business model will be able to "adapt quickly to any changes in (US) immigration policy".

 

In September, the US government increased the one-time fee for new H-1B visas to $100,000. TCS is the second-biggest beneficiary of H-1B visas after Amazon, with more than 5,500 H-1B visa holding employees as of Jun. 30, according to data on the US Citizenship and Immigration Services website. 

 

ARTIFICIAL INTELLIGENCE

The company Thursday said it will build an artificial intelligence data centre in India with a capacity of 1 gigawatt. This will be done in phases over a period of 5-7 years. "...our calculation roughly is about every 150 megawatts would be about a billion dollars," the management said, adding that this will be funded through a combination of debt and equity, partially by the company and partially by its partners.

 

"Currently, our calculation shows that we have only 1.2 gigawatt of capacity (data centres) in the country. And next five to six years, the demand can go up by almost 10 times." The company said it aims to become the world's largest AI-led technology services player.

 

TCS said it is committed to make significant investments towards transformation. "We are deepening our partnership in AI ecosystem, stepping up our efforts in M&A (mergers and acquisitions) and foray into new business ventures." It is also focussing on internal transformation and is building an AI-first culture. TCS is also seeing significant opportunity in AI-powered modernisation in the banking, financial services, and insurance segment.

 

For the quarter ended September, the company's consolidated net profit fell over 5% sequentially to INR 120.75 billion, lower than the Street's expectation of near INR 126 billion, dragged down by the restructuring cost of around INR 11 billion. However, its sequential revenue growth of nearly 4% to INR 657.99 billion was higher than the analysts' expectation of INR 651.44 billion.

 

TCS, India's largest IT company in terms of revenue and market capitalisation, released its quarterly results after market hours Thursday. Ahead of the results, its shares closed 1.1% higher at INR 3,061.70 on the National Stock Exchange.  End

 

US$1 = INR 88.78

 

Edited by Ashish Shirke

 

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