India’s Tata Consultancy Services (TCS) has reported a marginally better than expected performance for the third quarter, supported by rising demand for artificial intelligence services and renewed growth in its key North America market. This marked the first expansion in the region after two years of decline.
The company said AI driven services are now generating about 1.8 billion dollars annually, contributing nearly 5.8 percent of its total revenue. This helped offset the seasonal weakness that usually affects the December quarter.
“Based on the client conversations, strong deal momentum and the leadership we are gaining in AI, we are confident of a good calendar year 2026,” said chief executive K Krithivasan during a post earnings analyst call.
However, clients across India’s 283 billion dollar IT industry remain cautious about technology spending. Concerns over economic growth in the United States, uncertainty around tariffs, and proposed visa fee changes continue to weigh on the sector.
“The North America market has risen as the demand slowdown has bottomed out but we expect a gradual recovery as structural weakness continues,” said analyst Ambarish Shah.
North America, which contributes nearly half of TCS revenue, grew for the first time since the July to September 2023 quarter. Overall, five of the company’s eight regions reported growth, led by the Middle East and Africa at 8.3 percent and Continental Europe at 3.5 percent.
The company said softer performance in banking, financial services, and retail was due to year end seasonality, with a recovery expected from the current quarter.
Consolidated revenue rose 4.9 percent to 670.87 billion rupees for the quarter ended December 31, slightly above estimates of 666.76 billion rupees.
Net profit declined 14 percent to 106.57 billion rupees, missing expectations of 130.24 billion rupees. TCS attributed this to one time restructuring costs related to layoffs, the impact of new labour codes introduced in November 2025, and legal expenses.
The company’s total order book stood at 9.3 billion dollars, compared to 10.2 billion dollars a year ago. It also announced a dividend of 11 rupees per share and a special dividend of 46 rupees per share. TCS shares closed 1.3 percent higher ahead of the results.
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