Bizz Buzz Bureau Bengaluru

India’s largest IT services company, TCS, on Thursday kickstarted the earnings season for the Indian IT industry with an inline first-quarter performance. While revenue grew sequentially, operating margins fell, though the company reported one of the fastest rates of headcount growth in recent quarters.

For the first quarter of FY27, TCS posted a net profit of Rs 13,849 crore, an increase of 8.5 per cent (excluding the exceptional item) over the same period of the previous fiscal year. Revenue during the April-June quarter stood at Rs 72,275 crore, an increase of 13.9 per cent year-on-year. Revenue in dollar terms was $7.62 billion, an increase of 0.4 per cent sequentially in constant currency terms.

During the first quarter of FY27, the deal pipeline stood at $9.5 billion, lower than the $12 billion TCV (total contract value) reported in Q4FY26. Of the total order book reported in the April-June quarter, North America contributed $4.7 billion. BFSI (Banking, Financial Services & Insurance) contributed a TCV of $2.5 billion, while consumer business TCV stood at $1.4 billion.

The company’s operating margin during Q1FY27 came in at 24 per cent, a decline of 130 basis points over the previous quarter. The fall in margin was mainly driven by the wage hike given to employees.

Annualised revenue from artificial intelligence (AI)-related projects stood at $2.6 billion in Q1FY27, up 13.6 per cent over the previous quarter.

“Q1 FY27 reflects continued growth momentum and the strength of our strategic positioning, despite geopolitical and macro-economic headwinds. We delivered a strong order book of $9.5 billion, including a marquee AI-led transformation deal with SKF, while continuing to add clients across key revenue bands and scaling our AI business to a $2.6 billion annualised revenue run rate. As customers accelerate investments in AI, modernization, cybersecurity, sovereign cloud and platform simplification, our strong deal conversion, improving client mining and expanding ecosystem partnerships position TCS well to translate opportunity into sustained growth,” K Krithivasan, CEO of TCS, said.

North America posted a quarter-on-quarter decline of 0.4 per cent, while the UK, which contributed 17.2 per cent to the company’s revenue, grew by 0.3 per cent during the quarter. India also posted strong growth of 7.6 per cent during the first quarter of FY27.

“Q1 was characterized by strong growth across several services. We won multiple AI-led transformation deals with our dual commitment to AI-led optimization as well as innovation-led outcomes. We signed strategic partnerships with Anthropic and Mistral, expanding our AI ecosystem,” Aarthi Subramanian, Chief Operating Officer of TCS, said.

Among verticals, BFSI posted sequential growth of 1.6 per cent, while Technology & Services grew 1.7 per cent during the first quarter of FY27.

TCS posted one of its highest headcount growth rates in recent quarters, with employee strength increasing by 9,279 sequentially to 593,798 by the end of the June quarter. The company also announced an interim dividend of Rs 12 per share.