TCS Q2 net up 1.4 pc on wider margins; reports 20,000 drop in headcount

Mumbai, Oct 9 (PTI) India's largest IT services firm Tata Consultancy Services (TCS) on Thursday reported a nearly 1.4 per cent increase in consolidated net profit to Rs 12,075 crore in the July-September quarter on a wider profit margin.

Revenues from operations for the second quarter of FY2025-26 rose by 2.39 per cent to Rs 65,799 crore, up from Rs 64,259 crore in the year-ago quarter, according to a regulatory filing by TCS, which kicked off the Q2 earnings season for tech firms.

The company, which had stunned all in July by announcing plans to lay off 12,000 employees, reported a 20,000 drop in the overall headcount at the end of the quarter and disclosed that it took a Rs 1,135 crore hit due to severance packages offered to mid-to-senior level employees who were asked to go.

TCS also declared its vision to be the "world's largest artificial intelligence technology services" player in the next few years and announced a slew of initiatives centred around that through interventions in training the workforce.

Its chief executive and managing director, K Krithivasan, said that the overall demand environment is the same as last quarter, but reiterated that the international revenue growth in FY26 will be better than that in FY25.

It signed new deals of over USD 10 billion, which were higher both on-quarter and on-year, and Krithivasan said that, barring the UK from a geographical perspective and the consumer sector, the company is witnessing a sequential growth in its topline from all other segments.

From a profitability perspective, it reported a widening of the margin to 25.2 per cent, which was 0.70 per cent up from the preceding quarter. The margin figure excludes the severance pay.

Its chief financial officer Samir Sekhsaria said it prioritised wage hikes during the quarter by giving the increase to 80 per cent of its workforce.

Revenues from India declined 33.3 per cent during the quarter under review largely because of the hit due to the absence of BSNL revenues. The country now accounts for 5.8 per cent of the total revenues, compared to 8.9 per cent in the same quarter of the previous fiscal year.

TCS also announced the incorporation of a Wholly Owned Subsidiary (WOS) in India to establish multiple AI and Sovereign Data Centres for providing Infrastructure and technology-enabled Services.

In the filing, the company said it will establish a new business entity to build a 1 GW capacity AI data centre in India.

The plan entails an investment of over USD 6.5 billion over seven years and TCS will also be scouting for equity partners for the project.

Furthermore, it said it has acquired a 100 per cent stake in US-based ListEngage, for USD 72.80 million (excluding management incentives and costs). ListEngage is a full-stack Salesforce partner that specialises in Marketing Cloud, CRM, Data Cloud, Agentforce, and AI advisory services for enterprises.

TCS declared a second interim dividend of Rs 11 per equity share of Re 1 each of the company. The second interim dividend shall be paid on Tuesday, November 4, 2025, and the record date for the same is October 15, 2025, the company said.

Shares of TCS settled at Rs 3,061.95 apiece on the BSE on Thursday, 1.16 per cent higher than the previous close. The financial results were announced after market hours. PTI ANK MBI ANK AA MR MR