TCS' AI Business Crosses $2.6 Bn Run Rate as Q1 Revenue Jumps 14% YoY

Tata Consultancy Services (TCS) said its annualised AI revenue run rate reached $2.6 billion during the June quarter, up 13.6% sequentially, as India's largest IT services exporter reported a 13.9% year-on-year increase in consolidated revenue to ₹72,275 crore.

The Mumbai-headquartered firm’s net profit rose to ₹13,349 crore, up 4.6% from ₹12,760 crore recorded in the corresponding quarter of the last fiscal year, while operating margin stood at 24%. However, profit slid approximately 2.7% sequentially.

On a constant currency basis in dollar terms, the sequential growth remained flat.

The company also secured $9.5 billion in total contract value (TCV), led by several AI-focused mega deals across manufacturing, utilities, healthcare, and enterprise software, including an $800 million deal with Swedish industrial manufacturer SKF to redesign the company's enterprise operations around an AI-first digital core.

It also signed multi-million-dollar AI engagements with ServiceNow and a Europe-based Fortune Global 50 company, and won contracts involving AI-driven utility transformation, autonomous IT operations, and AI-powered software engineering.

The company also expanded its AI ecosystem through strategic partnerships with Anthropic and Mistral, while deepening collaborations with Google Cloud, Oracle, and ServiceNow. TCS said it will equip 50,000 employees with Anthropic's Claude models as it looks to accelerate enterprise AI adoption and build industry-specific AI offerings.

While the number of $100+ million and $50+ million deals remained the same, TCS added more $1+ million, $5+ million, and $10+ million deals to its pipeline.

North America continued to dominate the deal pipeline, with 48.3% of the share. In terms of verticals, the banking, financial services, and insurance sector took the largest share of the pie, while consumer business shrank from 15.6% in Q1 FY26 to 15% a year later.

The quarterly performance indicates a broader trend sweeping India's $300-billion IT services industry, where AI has rapidly become the primary driver of large technology spending even as traditional discretionary projects remain subdued.

Over the past year, companies including TCS, Infosys, HCLTech, Wipro and Tech Mahindra have increasingly reported that clients are redirecting budgets from conventional application development and maintenance towards AI-enabled modernisation, agentic AI, cloud transformation and automation initiatives.

“Q1 FY27 reflects continued growth momentum and the strength of our strategic positioning, despite geopolitical and macro-economic headwinds. We delivered a strong order book of $9.5 billion, including a marquee AI-led transformation deal with SKF, while continuing to add clients across key revenue bands and scaling our AI business to a $2.6 billion annualised revenue run rate,” K Krithivasan, Chief Executive Officer and Managing Director, said in a statement.

“As customers accelerate investments in AI, modernisation, cybersecurity, sovereign cloud and platform simplification, our strong deal conversion, improving client mining and expanding ecosystem partnerships position TCS well to translate opportunity into sustained growth,” he added.

Since the emergence of generative AI, India's IT majors have announced billions of dollars worth of AI-related deal wins, but monetisation has remained subdued as enterprises moved cautiously from experimentation to production deployments.

“We won multiple AI-led transformation deals with our dual commitment to AI-led optimisation as well as innovation-led outcomes. These wins validate our approach to AI-led efficient ITOps, accelerated Software Engineering and Modernisation, AI-first process redesign and implementation of SaaS solutions and Autonomous GBS,” Chief Operating Officer Aarthi Subramanian said.

TCS ended the quarter with 593,798 employees, up nearly 9,000 from the previous quarter but down nearly 19,000 year-on-year, while annualised IT services attrition stood at 13.6%.

The board declared an interim dividend of ₹12 per share.

Shares of TCS closed at ₹2,047.70 on July 9 on the BSE, down 0.5% from the previous close of ₹2,058.50.