TCS Q1 profit rises 4.6%; AI deals boost revenue

Tata Consultancy Services (TCS), India’s largest technology services exporter, registered a 4.6% rise in net profit for the first quarter of FY27, falling slightly below market expectation. Revenue grew 13.9% boosted by several multi-million dollar AI deals.

Net profit for the first quarter (April to June) of FY27 was Rs 13,349 crore, compared to Rs 12,760 crore in the same period a year ago. Revenue stood at Rs 72,275 crore, compared to Rs 63,437 crore a year ago. The market expectation was Rs 13,485 crore in net profit and revenues of Rs 71,743 crore.

During the quarter, the company bagged a $800 million AI-led business transformation deal from SKF, a Sweden-headquartered manufacturing company. This engagement will modernise SKF’s entire technology landscape, positioning it as an industrial manufacturer.

TCS said it also won a deal with a North American utility major for AI-driven utility transformation but it did not disclose the name of the company or the value of the transaction.

The company also entered into a multi-million dollar partnership with ServiceNow for large- scale AI adoption for enterprises.

TCS CEO K Krithivasan said, “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.”

The CEO remarked that growth came in despite geopolitical and macroeconomic headwinds, and the company’s AI business generated an annualised revenue run rate of $2.6 billion.

TCS said the total contract value at the end of first quarter stood at $9.5 billion.

During the quarter, TCS registered a moderate growth rate across sectors and geographies. Continental Europe turned out to be an outperformer, while energy, resources and utilities showed the highest growth during this period.

The operating profit margin was 24% for the first quarter, marginally lower than 24.5% registered during the period a year ago. This dip was primarily due to salary hikes.

TCS Chief Financial Officer Samir Seksaria said, “In Q1, we rolled out annual wage hikes, strengthened our partnership ecosystem, and targeted investments to enhance long-term competitiveness. We remain focused on building, acquiring, or partnering for AI-led capabilities while maintaining disciplined execution, industry-leading profitability and return ratios”.

On the human resources front, TCS delivered some positive news. The company's employee base has expanded for three quarters in a row. At the end of the first quarter, the total employee strength stood at 5,93,798, an increase of 9,279 from the immediate preceding quarter i.e, January to March. However, the total employee base is still lower compared to the first quarter of FY26 when the number was 6,13,069.

TCS Chief HR Officer Sudeep Kunnumal said, “This quarter, we completed annual salary increments for all associates globally and aligned salary structures with the new India Labour Code requirements.”