India's TCS marginally beats second-quarter revenue view as AI demand grows
Tata Consultancy Services reported September-quarter revenue that slightly beat expectations on Thursday, as AI-led demand and growth in its banking vertical helped India’s largest software services provider. AI is disrupting India’s $315 billion IT services sector by undermining the billable hour business model, but is also creating new demand as clients buy services being built on the…
Tata Consultancy Services (TCS), India's largest software services provider, reported slightly beating second-quarter revenue expectations on Thursday. This growth was driven by AI-led demand and expansion in its banking vertical. As AI disrupts the $315 billion IT services sector, it's creating new demand as clients invest in services built on the technology.
However, the company's operating margin saw a slight decline due to higher wages. TCS's annualized AI revenue reached $3.1 billion in the September quarter, up from $2.6 billion in the previous quarter. Analysts predict that AI will account for double-digit revenue share among India's other IT firms. The company's consolidated revenue grew 11.2% year-on-year to 731.88 billion rupees in the second quarter.
Despite this, TCS's sequential revenue growth excluding currency fluctuations was the lowest in three years for the July-September quarter. The firm's quarterly net profit rose 15% to 138.84 billion rupees, surpassing analysts' mean estimate. Deal wins for the quarter totaled $9.6 billion, up from $9.5 billion in the previous quarter and $10 billion in the same period last year.
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