Tata Consultancy Services is witnessing gradual improvement in demand conditions as clients demonstrate increased willingness to invest in projects that deliver clear and immediate returns on investment. The positive trend that emerged in the second quarter has continued into Q3 and is expected to carry forward into Q4, according to company management.

AI Demand Accelerates Across Client Base

The company's artificial intelligence portfolio has shown remarkable growth, reaching significant milestones across its client ecosystem. TCS has achieved substantial penetration in AI adoption among its largest clients, with engagement deepening across various industry verticals.

K Krithivasan, CEO and Managing Director, noted that while discretionary spending has not broadly rebounded, specific areas—particularly artificial intelligence—have demonstrated clear uptick in demand. The number of AI-led projects executed in Q3 increased compared to Q2, indicating sustained momentum in this segment.

Full-Stack AI Strategy Unveiled

TCS has positioned itself to become the world's largest AI-led services company through its comprehensive full-stack AI strategy. The approach encompasses multiple layers of AI implementation, from infrastructure development to intelligence deployment.

The company's AI capabilities include:

• Building AI data centres
• Developing AI models
• Creating agentic platforms
• Deploying enterprise-wide solutions
• Supporting customers across infrastructure to intelligence layers

Aarthi Subramanian, Executive Director, President and COO, highlighted that TCS proactively helps clients identify, implement and scale high-impact AI use cases through "innovate with AI" sessions, which accelerate production deployment timelines.

Financial Performance and Growth Metrics

TCS reported steady financial performance in Q3 with broad-based revenue growth across markets. The company maintained its competitive positioning while managing margins through operational efficiency improvements.

Krithivasan explained that TCS manages margins at a portfolio level rather than imposing thresholds at individual project levels. The company's differentiation stems from efficient delivery, productivity gains and pyramid optimisation after winning deals.

Market Outlook and Strategic Direction

Management expressed cautious optimism about future prospects, noting that clients remain selective in their spending decisions. Decision-making has improved compared to previous quarters, with clients making project-by-project evaluations based on payback periods.

While stopping short of reaffirming formal guidance, Krithivasan indicated that TCS continues to aspire to deliver higher international revenue in FY26 compared to FY25. AI-led services are expected to remain a key growth engine driving the company's expansion strategy.

The BSNL deal impact was clarified as largely neutral, not materially contributing to the quarter's growth. Overall, the company sees sustained momentum in AI adoption and gradual improvement in client engagement across its service portfolio.

Tata Consultancy Services has indicated that employee terminations will continue through the fourth quarter, according to recent company statements. The IT services giant has clarified that while workforce reductions are expected to persist, no specific targets have been set for these terminations.

Workforce Management Strategy

The company's approach to employee terminations reflects its ongoing organizational adjustments during the current quarter. Tata Consultancy Services has chosen not to establish predetermined numbers or percentages for workforce reduction, suggesting a more flexible approach to managing human resources based on evolving business requirements.

Q4 Employment Outlook

The continuation of employee terminations into Q4 represents part of the company's broader workforce management strategy. Without specific targets in place, the actual scale and scope of these terminations will likely depend on various operational factors and business conditions as they develop throughout the quarter.

This announcement provides insight into how India's largest IT services company is managing its human capital during the current business cycle, balancing operational efficiency with workforce optimization needs.