Tata Consultancy Services delivered mixed third quarter results for fiscal 2025, with net profit missing analyst estimates despite revenue growth meeting expectations. The IT services giant also announced a substantial dividend payout that significantly exceeded market projections.

Financial Performance Overview

The company's financial performance in the December quarter presented a contrasting picture of challenges and resilience:

TCS reported a consolidated net profit of ₹10,657 crore for the quarter ended December 2025, representing an 11.7% decline from ₹12,075 crore in the previous quarter. This performance fell short of Bloomberg analysts' estimates of ₹12,868 crore. On a positive note, quarterly revenue reached ₹67,087 crore, showing 2% growth and aligning with market expectations.

Exceptional Dividend Declaration

Investors received welcome news with TCS announcing a bumper dividend significantly above market expectations:

The total dividend of ₹57 per share comprises an interim dividend of ₹11 per share and a special dividend of ₹46 per share. The record date for determining eligible shareholders is January 17, with payment scheduled for February 3. This announcement substantially exceeded analyst expectations of ₹34.19 per share.

One-Time Labour Code Impact

The quarter's financial performance was significantly affected by regulatory changes. TCS recorded a one-time provisioning of ₹2,128 crore related to labour codes implementation. This impact followed the Government of India's notification on November 21, 2025, of four consolidated Labour Codes that replace 29 existing labour laws:

• Code on Wages, 2019
• Industrial Relations Code, 2020
• Code on Social Security, 2020
• Occupational Safety, Health and Working Conditions Code, 2020

Workforce Dynamics and Attrition

TCS experienced notable changes in its workforce composition during the quarter:

The company's total headcount decreased by 11,151 employees to 5,82,163 in the third quarter from 5,93,314 in the second quarter. The attrition rate rose marginally to 13.5% compared to 13.3% in the previous quarter. Since the first quarter of fiscal 2026, following restructuring announcements, the employee count has declined by 30,906.

Business Momentum and Growth Areas

Despite operational challenges, TCS demonstrated strength in key business areas. The company maintained a robust order book of $9.3 billion in the December quarter. Particularly noteworthy was the performance in emerging technologies, with annualised AI services revenue reaching $1.8 billion, representing a strong 17.3% quarter-on-quarter growth in constant currency terms. This growth in AI services highlights the company's successful positioning in high-demand technology areas and its ability to capitalize on digital transformation trends across industries.

Tata Consultancy Services announced on Monday, January 12, that its associates remain central to the company's transformation into an AI-first enterprise. The IT services major reported significant progress in building AI capabilities across its workforce during Q3 FY26.

AI Workforce Development

The company revealed that more than 217,000 associates now possess advanced AI skills as of the quarter. This substantial AI-skilled workforce is directly contributing to client success at scale, demonstrating TCS's commitment to leveraging artificial intelligence capabilities across its operations.

Strategic AI Transformation

TCS's focus on developing AI expertise among its associates reflects the company's strategic positioning as an AI-first enterprise. The extensive training and skill development initiatives have resulted in a significant portion of the workforce being equipped with advanced AI capabilities.

The company's emphasis on associate development in AI technologies positions it to better serve clients' evolving digital transformation needs. This workforce capability enhancement represents a key component of TCS's broader strategy to maintain its competitive edge in the rapidly evolving technology services landscape.