TCS optimistic despite 2.4% decline in revenue

BENGALURU: TCS remains optimistic about growth despite a muted FY26 performance, citing strong AI-led momentum and a steady deal pipeline. The company reported a 2.4% decline in constant-currency revenue-which excludes the impact of exchange rate fluctuations-while in dollar terms, revenue fell 0.5% to $30 billion.

However, operating margin rose 70 basis points to 25%, a four-year high, even as the company continued to invest in growth initiatives. In the March quarter, revenue stood at $7.6 billion, up 1.5% sequentially and 2.1% year-on-year. In constant currency terms, revenue grew 1.2% quarter-on-quarter but declined 0.6% annually. Operating margin edged up to 25.3%, a 10-basis-point increase, aided by favourable currency movements.

TCS CEO K Krithivasan said, "We do not see margins and growth as conflicting priorities-we believe we can deliver both. The strength of our margins enables us to continue investing in future growth areas, such as initiatives like Hypervault."

Last year, TCS secured $1 billion from private equity firm TPG to advance its AI data centre strategy in India, aligning with its ambition to scale its AI infrastructure play. OpenAI is set to become the first customer of TCS' Hypervault data centre business, starting with 100 MW capacity and scaling to 1 GW over time.

Krithivasan said TCS is seeing strong momentum in its Hypervault business, which is progressing toward building 1 GW of capacity, backed by customer commitments, land finalizations, and partnerships. The company is working with hyperscalers, semiconductor firms and model providers, positioning itself as an integration partner across infrastructure, engineering and AI services.

The company reported its third consecutive quarter of sequential growth, with constant-currency revenue rising 1.2% despite a challenging macro and geopolitical environment. This momentum, Krithivasan said, was broad-based across major markets, with North America growing 1.4% sequentially, the UK 2.4%, and Europe 1% on a constant-currency basis. Most industry segments also recorded growth. Order book performance remained strong in the March quarter, with $12 billion in total contract value, including three mega deals across telecom and healthcare.

TCS's headcount declined by 23,460 in FY26 to 584,519 employees.


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