The leader of India's $283 billion software services industry, TCS earns the bulk of its revenue from Western clients and has seen lacklustre demand in recent years due to global uncertainty and inflation.

Hopes of a rebound in 2025 were tempered in part due to US President Donald Trump's tariffs blitz, which has made customers wary of spending on big tech projects.

The company's revenue for the October-December quarter beat forecasts, rising 4.87 percent year-on-year to 670.87 billion rupees ($7.43 billion).

Analysts had on average expected a topline of 666.76 billion rupees.

TCS last reported double-digit revenue growth in mid-2023.

In an earnings release, chief executive K Krithivasan highlighted a ramp-up in demand for AI-related projects, noting the company's AI services now generate "$1.8 billion in annualized revenue".

But the firm's net profit for the three-month period ended December 31 missed expectations, falling 13.9 percent to 106.57 billion rupees.

TCS attributed the profit drop to higher expenses stemming from layoffs announced in 2025 and increased compliance costs due to India's new labour laws.

India's vast outsourcing sector also faces headwinds from Trump's decision to impose a $100,000 fee on new H-1B visa applications, which experts say will force Indian firms to hire more from the United States, squeezing margins as a result.

Many Indian software outsourcers including TCS have increased investments in AI tools and skilling, hoping to both earn new business and cut costs by boosting operational efficiencies.

"We remain steadfast in our ambition to become the world's largest AI-led technology services company... Our AI services now generate $1.8 billion in annualized revenue, reflecting the significant value we provide to clients through targeted investments across the entire AI stack," Krithivasan said in a statement.

Infosys, TCS's main domestic rival, is due to report its quarterly results later this week.

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Tata Consultancy Services

Infosys