Tata Consultancy Services Limited (TCS) has released the transcript of its earnings conference call for the quarter and nine-month period ended December 31, 2025. The call, conducted on January 12, 2026, provided an overview of the company's financial performance and strategic initiatives.

TCS reported a revenue of ₹67,087 crore for Q3 FY26. In reported currency, revenue grew by 2.0% sequentially and 4.9% year-on-year (YoY). In constant currency, revenue increased by 0.8% sequentially. International services revenue grew by 0.4% sequentially in constant currency. Growth was primarily driven by the Consumer Business Group, Energy, Resources & Utilities, Life Sciences & Healthcare, and Communications, Media & Information verticals. BFSI and Technology Software and Services also performed well, adjusted for seasonality. Europe showed continued strength, while North America was flat. Regional Markets demonstrated strong growth, and all next-gen service lines experienced sequential growth.

The company's operating margins stood at 25.2%, remaining stable sequentially, excluding one-off items. TCS reiterated its ambition to become the world's largest AI-led technology services company. AI services currently generate $1.8 billion in annualized revenue, with a 17.3% quarter-on-quarter growth in constant currency. In Q3, TCS secured several large deals, including a mega deal in North America, with a total contract value (TCV) of $9.3 billion. BFSI TCV was $3.8 billion, Consumer Business TCV was $1.4 billion, and North America TCV was $4.9 billion.

Samir Seksaria, CFO, detailed the financial performance, highlighting that improvements in productivity, pyramid management, and operational efficiencies contributed 80 basis points to margins, with favorable currency movements adding 20 basis points. The full-quarter impact of wage increases had a negative impact of 50 basis points, while investments in brand building and partnerships affected margins by 50 basis points. Net income margin was 20%, and EPS grew 8.5% YoY. Net cash from operations was $1.6 billion, with free cash flows at $1.4 billion. The Board recommended an interim dividend of ₹11 per share and a special dividend of ₹46 per share.

Aarthi Subramanian, Executive Director, President and Chief Operating Officer, discussed the company's AI strategy and its execution. She highlighted the progress in AI & Data, Enterprise Solutions, IoT, and Digital Engineering, and Cybersecurity, which led the growth. The annualized AI revenue crossed $1.8 billion with 17.3% QoQ growth in constant currency. The company is focusing on democratizing AI access through initiatives like 'AI Friday Hackathons' and scaling AI adoption across its enterprise, including AI-First solutions in hiring and employee onboarding. TCS is redefining its service lines with AI, exemplified by the Human+AI Services Autonomy Model. The company also set up two AI Labs in India and received the IoT Breakthrough Award 2026 for 'AI Powered IoT Solution Provider of the Year'.

Sudeep Kunnumal, Chief Human Resources Officer, reported that the global headcount stands at 582,163. Last twelve months (LTM) voluntary attrition in IT Services was 13.5%. The company has completed 51.2 million learning hours year-to-date (YTD) and acquired 3.8 million competencies YTD. Over 217,000 employees now possess higher-order skills in AI, a threefold increase from the previous year. TCS was ranked #1 in Everest Group PEAK Matrix for Talent Readiness for Next Generation Data, Analytics, and AI Services.

K Krithivasan, CEO and Managing Director, provided insights into industry vertical performance. BFSI showed good momentum despite seasonality, with a TCV of $3.8 billion. The Consumer Business Group saw sequential growth, led by Retail and Travel, while Life Sciences & Healthcare experienced good growth. Manufacturing posted marginal growth, with an expanded partnership with ABB. Technology Software and Services de-grew due to seasonality, and CMI showed positive growth momentum. Energy, Resources & Utilities (ERU) posted strong growth, and Growth Markets remained resilient. TCS announced a $1 billion equity partnership with TPG for AI data center infrastructure and the acquisition of Coastal Cloud to strengthen its Salesforce and AI consulting services, pending regulatory approval.

During the Q&A session, management expressed confidence in a good CY2026, citing improving demand environments and the success of AI-related projects. They noted that weakness in North America and BFSI was primarily due to seasonality. The company plans to inch closer to its 26% to 28% margin aspiration band. A provision of ₹2,128 crore was made for new labor codes, comprising gratuity and leave liability, classified as a one-off expense with minimal ongoing impact. Restructuring efforts are ongoing, with approximately 1,800 people released in Q3, and this process is expected to continue into the next quarter.