Stories
TCS AI Business Drives Higher Margins As Revenues Hit 3.1 Billion Dollars
- •Tata Consultancy Services reported its annualised AI revenue reached 3.1 billion dollars in the quarter ended September 30, crossing 10 percent of overall revenue with higher margins than the company average.
- •Chief financial officer Samir Seksaria noted that while overall portfolio pricing remains stable, AI services are commanding better pricing despite near-term investments and rising subcontracting expenses.
- •Executive director and COO Aarthi Subramanian highlighted that enterprise demand is shifting toward measurable business outcomes, enterprise system transformations, and autonomous global business services.
- •TCS is seeing increased demand for governance platforms to manage AI agents, control token costs, and ensure security as companies scale their artificial intelligence deployments.
- •The company reported a total contract value of 9.6 billion dollars for the quarter, excluding major deals, while maintaining its long-term operating margin aspiration of 26 to 28 percent.
Key Questions Answered
During TCS's Q2 FY27 earnings call on October 8, the company reported that its annualised AI revenue reached $3.1 billion, crossing 10% of overall revenue. Chief financial officer Samir Seksaria stated that these AI revenues are generating much higher margins than the company average.
TCS maintains a long-term operating margin aspiration of 26% to 28% while prioritizing near-term investments for growth. For the second half of FY27, management anticipates additional pressures including normal furlough seasonality, continued ecosystem investments, and the impact of the proposed MHP acquisition, which could affect margins by about 50 basis points.
TCS executive director and COO Aarthi Subramanian outlined three primary demand areas: AI-native solutions designed around business outcomes, AI-led transformation of enterprise systems, and autonomous global business services. Enterprises are also increasingly exploring agentic AI across human resources, finance, procurement, and customer service operations.
