Archive · 9 Oct 2026
TCS Growth Recovery Remains Gradual as Deal Wins Moderate
Tata Consultancy Services, or TCS, earned more revenue in the September quarter than a year earlier.
Its growth from the previous quarter was modest, and analysts said the recovery in customer demand is happening slowly.
The company won deals worth $9.6 billion, a little less than a year ago.
Its AI services business grew quickly and reached about one-tenth of its revenue.
But spending on AI, skilled workers, and partnerships added pressure to profits.
TCS's operating margin stayed at 24% compared with the previous quarter.
Analysts also pointed to weak customer spending in some regions and possible pressures later in the year.
TCS still aims for a long-term operating margin of 26% to 28%.
TCS reported Q2FY27 revenue of Rs 73,188 crore, up 11.2% year-on-year and 1.3% sequentially.
Constant-currency revenue grew 2.8% year-on-year and 0.5% sequentially, broadly in line with estimates.
Quarterly deal wins totaled $9.6 billion, down 4% year-on-year but slightly above the preceding quarter.
Annualised AI services revenue rose 19.2% sequentially to $3.1 billion, about 10% of company revenue.
Operating margin was flat sequentially at 24%, down around 120 basis points year-on-year amid investment and cost pressures.
- Who
- Tata Consultancy Services (TCS), with analysts commenting on its results.
- What
- TCS reported Q2FY27 results showing modest sequential revenue growth, lower year-on-year deal value, strong AI services growth, and a 24% operating margin.
- When
- The September quarter of FY27 (Q2FY27).
- Where
- TCS operations across international markets, including North America, the UK, Continental Europe, and India.
- Why
- Analysts attributed the gradual recovery to continued weakness in discretionary spending; margin pressures reflected investments in AI, partnerships, and specialised talent, as well as higher subcontracting costs.
AI as a growth opportunity
AI and investment pressures
Impact of AI on TCS
AI as a growth opportunity
AI services annualised revenue topped $3.1 billion, and analysts said expanding enterprise AI deployments and transformation programmes could support growth.
AI and investment pressures
Analysts noted that AI-driven productivity gains may pressure traditional services revenue, while investments in AI capabilities contributed to margin pressure.
Near-term profitability
AI as a growth opportunity
TCS retained its long-term operating margin aspiration of 26% to 28%, with currency benefits and operational efficiencies helping offset some costs.
AI and investment pressures
Analysts expected near-term profitability to remain under pressure from investment priorities, higher subcontracting costs, potential MHP acquisition-related dilution, and seasonal furloughs.
- Q2FY27 revenue
- Rs 73,188 crore; up 11.2% year-on-year and 1.3% sequentially.
- Constant-currency growth
- Revenue rose 2.8% year-on-year and 0.5% sequentially.
- Deal value
- Total contract value was $9.6 billion, down 4% year-on-year and slightly above the prior quarter's $9.5 billion.
- AI services
- Annualised revenue exceeded $3.1 billion, up 19.2% sequentially, and represented about 10% of TCS revenue.
- Operating margin
- 24%, unchanged sequentially and down around 120 basis points year-on-year.
- Long-term margin aspiration
- TCS retained its target range of 26% to 28%.
- Regional growth
- International revenue rose 1.2% sequentially in constant currency; the UK grew 3.5%, while North America and Continental Europe grew 0.4% each.