TCS CEO K Krithivasan on Navigating Tough Times: "We Faced One of the Worst Toplines, Yet Achieved Remarkable Resilience"

Tata Consultancy Services (TCS) reported an 11.95% rise in net profit, reaching Rs 12,380 crore for Q3. With a total contract value of $10.2 billion, TCS anticipates robust growth in FY2026, bolstered by a solid order book and strong sector performance.

Tata Consultancy Services (TCS) has revealed its financial performance for the third quarter, achieving a remarkable 11.95% rise in net profit, amounting to ₹12,380 crore during the December quarter. This figure reflects an increase from ₹11,058 crore in the same quarter last year and ₹11,909 crore in the preceding September quarter. Additionally, the company’s total income witnessed a growth of 6.13%, reaching ₹65,216 crore, compared to ₹61,445 crore in the previous year's quarter and slightly exceeding the ₹64,988 crore recorded in the last quarter.

As the largest IT service provider in India, TCS showcases a consistent upward trajectory in its financials. The CEO and Managing Director, K Krithivasan, shared insights with Economic Times, indicating that the company’s results should not be hastily deemed subpar. He emphasized the importance of contextualizing the performance amid broader macroeconomic variables that influence client spending habits. He stated, “We need to understand the context. For an extended period, we've encountered market uncertainty and a reduced willingness to invest from clients. If we compare our recent quarters, which were exceptionally strong, to a sudden downturn, labeling it as poor performance may not be justified.”

Krithivasan further mentioned his optimism regarding the fiscal year 2026, projecting it to be more favorable than the ongoing fiscal year. When questioned about the upbeat outlook for FY2026, he remarked, “Our positive sentiment is driven by our order book. Despite what you may regard as a disappointing top-line, we have recorded one of the best Total Contract Value (TCV) figures for a Q3.” He highlighted that the TCV remained robust across various sectors, industry segments, and geographical locations. Furthermore, he noted a significant decrease in the deal cycle duration, signaling the resurgence of discretionary projects. “All these factors suggest that perhaps we are witnessing a turnaround,” he affirmed.

During the third quarter, TCS managed to secure an impressive TCV of $10.2 billion, boasting a book-to-bill ratio of 1.4, even in a seasonally challenging quarter. The Consumer Business Group propelled the growth with a 1.1% increase, while the Energy, Resources, and Utilities sector experienced a 3.4% rise. The regional markets displayed a remarkable growth of 40.9%. However, the Banking, Financial Services, and Insurance (BFSI) segment, which constitutes 30.5% of TCS’s operations, recorded only a 0.9% YoY growth. On the other hand, the Life Sciences and Healthcare segment faced a decline of 4.3% YoY.

Delving deeper into geographical performance, TCS’s North America sector accounted for 47.7% of its revenue in Q3FY25, representing a decrease of 2.3% year-on-year. Conversely, the Latin America business showcased a 7% growth, amounting to 1.9%, while the European market rose by 4.1%, contributing to 16.6% of the overall revenue.

Overall, TCS’s financial results illustrate a mix of challenges and opportunities in a fluctuating economic landscape. Managed strategically, TCS's continued investment in its order book and its emphasis on diverse market segments may position it favorably for future growth, reflecting resilience in a competitive industry.