TCS Q4 2025 Earnings Highlights Podcast - Modern IT Vendor Management for Cloud & AI

Financial Highlights

TCS’s FY25 revenue exceeded $30 billion, reaching $30.18 billion, a year-on-year growth of 3.8% or 4.2% in constant currency
In Q4 FY25, the revenue was $7.47 billion, showing a year-on-year increase of 1.4% or 2.5% in constant currenc Sequentially, USD revenue grew by 0.8%
TCS generated $5.49 billion in free cash flow in FY25

As of March 31, 2025, TCS’s net employee count was 607,979
The company added a modest 625 associates in Q4 FY25, one of the lowest quarterly net additions in recent years
TCS onboarded 42,000 trainees in FY254 …. The hiring number for FY26 is expected to be similar or slightly higher
The IT services attrition (LTM) stood at 13.3% at the end of Q4 FY252 …, a slight increase from the previous quarter, but the quarterly annualized attrition has decreased
TCS has decided to delay its annual wage hikes, with the timing and extent to be determined during the year based on the business environment
The number of clients contributing more than $100 million in revenue increased by 2 to 64 on a year-on-year basis
TCS had a customer base of 1,332 clients with over $1 million in revenue, an increase of 38 over the last year

TCS is experiencing significant and increasing traction for GenAI and agentic AI services and solutions across industries
Over 580 business engagements involving GenAI were delivered or in flight during Q4 FY25
AI.Cloud was a leading contributor to growth among service lines
TCS distinguishes between AI for Business (new transformation projects) and AI for IT (focusing on productivity gains)
TCS is utilizing a combination of GenAI and TCS Mastercraft to migrate over 50 million lines of COBOL code to Java for a major financial services client
The WisdomNext 2.0 platform has been enhanced with agentic capabilities
Strong traction in AI adoption is a key factor driving the order book growth

While there were improving market sentiments in January, uncertainty resurfaced due to discussions around tariffs and global turmoil, leading to delays in decision-making and project starts for discretionary investments
The consumer retail, travel & hospitality, and auto sectors are expected to bear the brunt of the tariffs
Despite the uncertainty in March, TCS believes FY26 would be a better year than FY25, based on their strong order book, assuming the uncertainty is short-lived
TCS has not seen major project cancellations, but there have been some ramp-downs and delays
The current environment is also creating opportunities for cost optimization programs for TCS

The sequential decline in operating margin in Q4 was attributed to the full cycle of increments, merit-based interventions, and continued investments4 …. TCS maintains a long-term operating margin target of 26-28%
While discretionary spending faced delays in March due to uncertainty, the order book remains strong
Regarding the impact of AI, TCS plans to share productivity gains with customers, but anticipates a net positive impact on revenue due to new AI-driven projects
The appointments of a COO and CSO are aimed at strengthening leadership bandwidth and focus on driving growth in new technologies3 ….
North America remains a primary focus market for TCS
The slight increase in attrition is not a major concern
The decision on wage hikes will be made later in the year depending on the business environment
The outlook for FY26 being better than FY25 is primarily based on the strong order book and visibility for the international business
There has been no significant change in deal durations or the mix between new and renewal deals compared to the previous quarter
TCS is strategically investing in talent with digital skills, including AI/GenAI, through both campus and lateral hiring
TCS believes the current macroeconomic uncertainty will be short-lived