Tata Consultancy Services (TCS) reported a consolidated net profit of ₹12,075 crore for the quarter ended September 30, 2025 (Q2FY26), marking a modest 1.4% year-on-year increase from ₹11,909 crore in the same quarter last year. The IT giant’s earnings were impacted by one-time restructuring costs following a reduction in headcount.
Earnings Impacted by Restructuring Expenses
TCS incurred ₹1,135 crore in restructuring-related expenses, primarily due to severance payments after releasing employees whose redeployment was not feasible. The company noted that these costs were disclosed as exceptional items in its consolidated financial statements.
Despite the one-time costs, revenue from operations rose 2.39% year-on-year to ₹65,799 crore, compared to ₹64,259 crore in Q2FY25 — slightly ahead of market estimates. The total contract value (TCV) stood at $10 billion, driven by multiple large deals across key industries.
Management Commentary
Commenting on the results, K. Krithivasan, MD and CEO of TCS, said:
“We have delivered a good performance despite continued macroeconomic challenges. All verticals except consumer business and all geographies except the United Kingdom showed positive sequential growth.”
He added that the company’s deal pipeline remains strong, supported by a mix of cost optimisation, transformation, and platform deals across existing and new clients.
Margins and Employee Costs
TCS’s operating margin improved to 25.2% in Q2FY26, up from 24.5% in the previous quarter, even after implementing wage hikes.
“Providing increments to our employees was a key priority, and we have rolled out wage hikes for 80% of the workforce,” said Samir Seksaria, CFO of TCS.
Chief HR Officer Sudeep Kunnumal noted that TCS has significantly localised its US workforce, enabling the company to swiftly adapt to evolving H1B visa and immigration policies.
Strategic Developments
During the quarter, TCS announced several strategic initiatives:
- Formation of a new subsidiary in India to establish AI and sovereign data centres with a planned 1-gigawatt capacity.
- Acquisition of US-based ListEngage, a full-stack Salesforce solutions partner, for $72.8 million to strengthen its cloud and CRM service offerings.
- Interim dividend declared: ₹11 per share.
Summary
TCS reported Q2FY26 net profit of ₹12,075 crore, up 1.4% YoY, as restructuring expenses of ₹1,135 crore offset revenue growth. Operating margins rose to 25.2%, supported by strong deal wins worth $10 billion and steady demand across key verticals. The IT major also announced new investments in AI infrastructure and strategic acquisitions, signalling continued focus on long-term innovation despite near-term cost pressures.
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