BENGALURU, Jan 12 (Reuters) – India’s Tata Consultancy Services on Monday posted a third-quarter revenue marginally above estimates on AI-driven demand, with revenue from its key North America market registering growth for the first time in two years.
Artificial intelligence-led tech spending boosted growth for the Tata Group firm in a traditionally weak quarter, with AI services generating $1.8 billion annually and making up about 5.8% of total revenue.
“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 K Krithivasan, chief executive during a post-earnings analyst call.
Clients of India’s $283 billion IT industry, however, remain cautious about tech spending due to growth concerns in the world’s largest economy, with macro headwinds like uncertainty over U.S. tariffs and proposed $100,000 visa fees further weighing 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 Ambarish Shah, analyst, Systematix.
The region, accounting for nearly half of the firm’s revenue, grew for the first time since July-September 2023, with five out of eight regions growing, led by Middle East and Africa at 8.3% and Continental Europe at 3.5%.
The company also said tepid numbers in banking and financial services, and retail segments were due to the year-end seasonality impact and expected recovery from the ongoing quarter.
Consolidated revenue for India’s largest software services firm rose 4.9% to 670.87 billion rupees ($7.44 billion) in the quarter ended December 31.
Analysts had expected 666.76 billion rupees, as per data compiled by LSEG.
The Mumbai-based firm’s quarterly net profit fell 14% to 106.57 billion rupees, missing analyst estimates of 130.24 billion rupees. TCS attributed this to one-time restructuring costs associated with layoffs, the impact of India’s new labour codes enacted in November 2025 and other legal costs.
TCS’s total order book stood at $9.3 billion in the quarter, down from $10.2 billion a year ago.
The company declared a dividend of 11 rupees per share as well as a special dividend of 46 rupees per share. Its Mumbai-listed shares closed 1.3% higher ahead of the results.
($1 = 90.1660 Indian rupees)
(Reporting by Sai Ishwarbharath B; Editing by Janane Venkatraman and Vijay Kishore)