TCS Q4 Earnings Miss Expectations; AI Revenue Hits $1.8B Amid US Hiring Push
Overview
Tata Consultancy Services (TCS) reported December quarter results below analyst forecasts for revenue and EBIT margins. Despite cautious global spending, demand for tech transformation and AI projects remains strong, with AI services revenue climbing to an annualized $1.8 billion. The IT giant is also accelerating local hiring in the US, planning 15,000 new employees over five years, while reducing reliance on H-1B visas.
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TCS Navigates Subdued Quarter Amidst AI Growth Surge
Tata Consultancy Services (TCS) posted financial results for the December quarter that fell short of analyst expectations on both revenue growth and earnings before interest and taxes (EBIT) margins. The IT services giant acknowledged global economic uncertainties impacting client spending, yet emphasized the continued resilience of demand for technology-driven transformations.
AI Services Drive Revenue Momentum
Despite broader market headwinds, TCS saw its AI services revenue surge to an annualized $1.8 billion, up from $1.5 billion in the prior quarter. CEO K Krithivasan highlighted that clients are increasingly signing new projects focused on return on investment and rapid outcomes, particularly through short-cycle, AI-led initiatives. These projects deliver defined results swiftly, indicating a growing contribution from artificial intelligence.
Shifting Hiring Strategies Globally
Chief Human Resources Officer Sudeep Kunnumal addressed concerns over a significant headcount reduction of approximately 31,000 employees over the last two quarters. He asserted that demand for high-quality talent remains robust, with ongoing investments in upskilling the existing workforce. TCS is actively recruiting from campuses, lateral hires, and leadership roles worldwide.
Kunnumal also detailed a strategic pivot in the United States, stating TCS is on track to hire around 15,000 people locally over the next three to five years. This initiative aims to reduce dependence on H-1B visas, as most recent requirements have been met through local recruitment, signifying a commitment to building a strong domestic workforce in key markets.
