TCS India revenue falls 10.3 per cent sequentially in Q2 FY27

MUMBAI: TCS may be building its next growth engine in India, but its latest revenue numbers suggest the home market has hit a temporary speed bump. Tata Consultancy Services (TCS) reported a 10.3 per cent sequential decline in its India business in the second quarter of FY27, even as growth across international markets helped the technology services major increase consolidated revenue and expand its artificial intelligence (AI) business.

India contributed 5.5 per cent to TCS’ revenue mix in the September quarter, down from 6.2 per cent in Q1 FY27 and 5.8 per cent in Q2 FY26. The business contracted 10.3 per cent quarter-on-quarter in constant currency terms, although it remained 6 per cent higher than a year earlier. The contrast puts the spotlight on a market that continues to deliver annual growth but has lost ground in the company’s sequential performance.

At the consolidated level, TCS reported revenue of Rs 73,188 crore, up 1.3 per cent sequentially and 11.2 per cent year-on-year in rupee terms. In constant currency terms, revenue increased 0.5 per cent quarter-on-quarter. Net profit stood at Rs 13,884 crore, marginally higher than the Rs 13,849 crore reported in the June quarter and up from Rs 12,904 crore in the corresponding period last year.

The company reported an operating margin of 24 per cent and a net margin of 19 per cent. Its annualised AI revenue reached $3.1 billion during the quarter, crossing 10 per cent of revenue, while total contract value (TCV) stood at $9.6 billion. These figures indicate that AI-related business and contract wins remain important parts of the company’s growth story, even as performance varies across geographies.

The geographical split highlights the extent to which TCS relies on international markets. North America accounted for 48.3 per cent of revenue in Q2 FY27, followed by the UK at 17.8 per cent, Continental Europe at 15.2 per cent and Asia Pacific at 8.6 per cent. India contributed 5.5 per cent, making it a relatively small part of the company’s reported revenue mix.

India was also the only reported geography to record a double-digit sequential decline in constant currency terms. While the domestic business contracted 10.3 per cent from the June quarter, the UK grew 3.5 per cent, Latin America expanded 4.3 per cent and Asia Pacific increased 2 per cent. North America and Continental Europe each recorded sequential growth of 0.4 per cent.

International revenue as a whole rose 1.2 per cent sequentially in constant currency terms, helping offset the weakness in India. The contrast suggests that the company’s overall quarterly growth was supported by demand across overseas markets rather than a uniform recovery across its geographical operations.

The year-on-year picture, however, is less stark for India. Its 6 per cent constant-currency growth exceeded TCS’ overall year-on-year constant-currency growth of 2.8 per cent across its reported markets. In other words, the domestic business was larger than it had been a year earlier, despite the sharp reversal from the previous quarter.

The difference between the sequential and annual comparisons is important. Quarter-on-quarter performance measures the latest movement against the preceding three months, while year-on-year growth compares the business with the corresponding period last year. TCS’ figures therefore point to a domestic operation that remains ahead of its year-ago level but experienced a significant slowdown in the latest quarter.

The revenue mix also underlines the influence of North America, which accounted for nearly half of the company’s business. Movements in this market can have a substantial bearing on consolidated performance, while growth in Europe and Asia Pacific provides additional support. The latest results show that the company’s geographical diversification helped cushion the decline in India.

Industry-level performance provided another source of momentum. Banking, financial services and insurance (BFSI) grew 2.5 per cent sequentially in constant currency terms, while Manufacturing and Technology & Services each expanded 3.1 per cent. The three segments represented 32.8 per cent, 9 per cent and 8.6 per cent of TCS’ Q2 FY27 revenue mix, respectively.

BFSI remained the largest of the three segments by revenue contribution, reflecting the importance of financial institutions to TCS’ business. Manufacturing and Technology & Services also recorded sequential growth, providing support beyond the financial services sector.

The results point to differing growth patterns across TCS’ markets and client industries. While the domestic geography contracted, several major industry segments expanded from the previous quarter. The company’s overall performance consequently reflects a combination of geographical weakness, sector-level growth and continued investment in emerging technology services.

Artificial intelligence was among the most notable elements of the quarter. TCS reported annualised AI revenue of $3.1 billion, taking the business beyond the 10 per cent mark of total revenue. The figure highlights the growing commercial importance of AI-related work within the technology services company’s portfolio.

Annualised revenue is a measure of the pace of business based on the reported period; it should not be confused with the amount of AI revenue recognised over the full financial year. Nevertheless, crossing $3 billion on an annualised basis indicates the scale at which AI services have developed into a meaningful business area for TCS.

The company’s total contract value for Q2 stood at $9.6 billion. TCV measures the value of contracts signed during a period and provides an indication of the business secured, although it does not represent revenue recognised immediately. The figure will therefore be watched alongside subsequent revenue performance to assess how effectively contract wins translate into reported growth.

TCS also continued to expand its AI-related intellectual property portfolio. As of 30 September 2026, the company had applied for 10,044 patents, including 241 applications during the quarter, and had received 5,885 patents cumulatively. Of these, 2,176 patents filed and 649 granted were related to AI-led inventions.

The figures underline the company’s focus on developing technology capabilities alongside its services business. However, the commercial impact of these investments will depend on customer adoption, project execution and the extent to which AI-related contracts generate sustained revenue and margins.

Despite the sequential decline in domestic revenue, TCS announced several India-linked initiatives during the quarter, spanning global capability centres (GCCs), generative AI and industrial engineering.

One of the key developments was the proposed transition of Best Buy’s GCC in India to TCS. Under the agreement, the centre is to be transformed into an AI Capability Centre, combining Best Buy’s retail and enterprise knowledge with TCS’ technology, engineering, AI and global delivery capabilities.

The arrangement reflects the evolving role of GCCs in India. Traditionally associated with back-office operations and technology support, these centres are increasingly being positioned to handle specialised functions, including product development, data, engineering and AI-led work. The proposed transition would bring TCS into a closer operational relationship with Best Buy’s India-based capability centre, although the announcement alone does not establish the future revenue contribution of the arrangement.

TCS also launched the Consumer Business Group Gemini Experience Center in Kolkata in partnership with Google Cloud. The centre is intended to demonstrate AI-led innovations for consumer businesses using Google Cloud and Google’s Gemini models.

The initiative places generative AI within the context of practical business applications, where companies are exploring ways to improve customer interactions, personalise experiences and support operational processes. The centre also adds to TCS’ efforts to build environments in which clients can explore and test emerging technology solutions.

In manufacturing and engineering, the company launched its Industrial Autonomy & Engineering Lab Lights-Out Factory at its Sahyadri Park campus in Pune. The facility is designed to simulate self-optimising factories by combining digital twins, robotics, industrial AI, factory control systems and real-time operational intelligence.

A lights-out factory refers to a highly automated production environment in which systems can operate with limited direct human intervention. By bringing together connected industrial technologies, the Pune facility is intended to demonstrate how manufacturers could improve monitoring, coordination and decision-making across factory operations.

TCS also launched the TCS Autonomous Engineering Lab Powered by NVIDIA at its Global Axis campus in Bengaluru. The lab focuses on AI-led solutions across mobility and manufacturing, extending the company’s work in engineering-intensive industries.

Together, the initiatives span consumer-facing generative AI, enterprise capability building and industrial automation. They also illustrate how India remains an important base for TCS’ technology infrastructure and engineering activities, even as the country’s share of consolidated revenue declined during the quarter.f Rs 73,188 crore, net profit of Rs 13,884 crore and a workforce of 598,056 employees. Its results combined modest sequential consolidated growth with a sharp contraction in the India business, while overseas markets and several industry segments provided support.

The company’s annual AI revenue run rate of $3.1 billion, quarterly contract value of $9.6 billion and continued investment in AI-led facilities point to the importance of technology transformation in its strategy. Yet these developments sit alongside a more uneven revenue picture, with the domestic business declining sequentially even as it remained ahead of its year-ago performance.

For the coming quarters, the key indicators will include whether India returns to sequential growth, how international markets sustain their momentum and how quickly AI-related contracts translate into recognised revenue. TCS’ latest numbers show that the growth story is continuing, but not at the same pace across every geography.