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Informist, Thursday, Jul. 9, 2026

 

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--TCS CEO: Apr-Jun operating margin down QoQ primarily on wage hikes 
--CONTEXT: Comments by TCS' management in post-earnings analyst concall 
--TCS: Campus hiring continues to be focused on digital, AI native talent 
--TCS: See recovery in healthcare, lifesciences soon, positive on mfg 
--TCS CEO: In most cases AI productivty gains passed on in 10-15% range 
--TCS: Optimistic on sustained growth in BFSI, tech svcs to continue to grow 
--TCS: Consumer ops to turn around once mkt sentiment on geopolitics improves 
--TCS: Saw slight revenue-mix shift towards AI-led transformation deals Q1 
--TCS CEO: Confident of converting demand into growth for co 

 

By Shakshi Jain and Gunjan Rajput

 

NEW DELHI – Information technology services major Tata Consultancy Services Ltd. anticipates recovery in the life sciences and healthcare segment in the ongoing quarter and is positive on improvement in revenue contribution from the manufacturing segment as well, Chief Executive Officer and Managing Director K. Krithivasan said in a post-earnings conference call with analysts Thursday.

 

The company remains optimistic about the banking, financial services, and insurance segment, which is the highest revenue-generating vertical for the company. "Tech services will continue to grow...Consumer business will turn around once we have better market sentiment on geopolitics," the chief executive said.

 

In the June quarter, constant currency revenue of the life sciences and healthcare segment fell 1% sequentially and that of the manufacturing segment declined 0.5%. The consumer business segment logged the strongest revenue fall in constant currency terms at 4% on a sequential basis. Overall, the company's consolidated revenue in constant currency terms grew 0.4% sequentially and 3.2% on year for the quarter.

 

In rupee terms, TCS reported a consolidated net profit of INR 133.49 billion for the June quarter, down 2.7% sequentially. The sector bellwether's revenue for the three months rose 2.2% on quarter to INR 722.75 billion. 

 

The IT behemoth's operating margin for the quarter contracted 130 basis points sequentially to 24%. This was primarily on account of the annual salary increments rolled out across the organisation, the company management said. The exercise had a 170 bps impact on the company's margins, part of which was offset through currency benefits and operational efficiencies, as per the management.

 

TCS won multiple artificial intelligence-led transformation deals during the past quarter, which shifted the company's order book-mix "marginally" towards the category, according to Krithivasan. On the matter of revenue deflation due to artificial intelligence, the top executive said in most cases, the company is seeing 10-15% productivity gains through the use of AI from day one, which when passed on to customers, is compensated for through additional opportunities generated from the clients. "It will be very difficult to say whether we are done with all productivity gains that are being passed on," he added.

 

TCS reported annualised artificial intelligence revenue of $2.6 billion for the June quarter, up 13.6% sequentially.

 

On hiring freshers, the company said it continues to focus on digital and AI-native talent. "...last quarter we hired, onboarded 14,000 campus grads across. And as we speak, we are in the top universities across the country and hiring for top talent specifically looking for AI native skills," a senior company executive said.

 

Overall, TCS net added 9,279 employees during the quarter to take its overall headcount to 593,798 as of Jun. 30. The 12-month attrition rate in IT services fell to 13.6% from 13.7% a quarter ago, as per a fact sheet released by the company. 

 

Krithivasan closed the call assuring analysts that TCS is well positioned to convert demand into stronger growth.

 

Market participants will react to the company's June-quarter earnings on Friday as TCS detailed the results post market hours. Shares of the company closed 0.4% lower at INR 2,049.50 on the National Stock Exchange on Thursday.  End

 

US$1 = INR 95.38

 

Edited by Deepshikha Bhardwaj

 

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