TCS Q1 order book grows 13.2% YoY to $9.4 billion

Mumbai, July 10, 2025 — Tata Consultancy Services (TCS), India’s largest IT services exporter, reported a strong year-on-year (YoY) growth in its order book for the first quarter of FY26, reaching $9.4 billion, up 13.2% compared to $8.3 billion in Q1 FY25. The robust deal pipeline reflects enduring client confidence and a stable demand environment despite ongoing macroeconomic headwinds.

Strong Deal Wins Across Key Verticals

TCS’s Q1 performance was driven by significant wins across sectors such as banking, financial services and insurance (BFSI), retail, and healthcare. The company secured several large and mega deals, particularly in North America and Europe, further solidifying its global market presence.

Rajesh Gopinathan, CEO and Managing Director of TCS, stated,

“We are pleased to start the fiscal year on a strong note with a $9.4 billion TCV (Total Contract Value). This reflects our clients’ trust in our ability to deliver digital transformation and operational resilience at scale. We continue to see strong traction in AI-led automation and cloud migration services.”

AI and Cloud Services Drive Growth Momentum

Analysts note that a significant portion of the order book growth came from digital transformation initiatives, especially those incorporating generative AI, cloud infrastructure modernization, and cybersecurity solutions. TCS’s early investments in AI, along with strategic alliances with hyperscalers like AWS, Microsoft Azure, and Google Cloud, are beginning to yield tangible benefits.

“TCS has successfully positioned itself as a leading player in AI-enabled enterprise solutions,” said Harsh Mehta, IT sector analyst at Axis Securities.

“Its ability to combine industry-specific expertise with scalable digital delivery gives it a competitive advantage in capturing new-gen tech spending.”

Macro Environment Remains Challenging but Stable

Despite persistent concerns over inflation in the U.S. and geopolitical tensions in Europe and Asia, TCS managed to maintain a healthy deal win rate and margin resilience. However, the company did note slight delays in decision-making among clients in discretionary spending areas, a trend that has persisted over the last few quarters.

TCS CFO Samir Seksaria highlighted during the earnings call:

“While the overall deal pipeline remains robust, we are seeing selective caution in discretionary budgets. Our focus remains on cost optimization, client mining, and strengthening our delivery capabilities.”

Financial Highlights and Profitability Metrics

Though the article centers around the order book, TCS also reported the following key financial metrics:

• Revenue: ₹62,460 crore, up 5.6% YoY

• Net Profit: ₹11,730 crore, up 8.2% YoY

• Operating Margin: 24.7%, compared to 23.5% last year

The improved margin performance was attributed to higher utilization rates, better offshore delivery mix, and early gains from AI-led productivity improvements.

Employee Metrics and Hiring Outlook

TCS reported a net reduction in headcount for the second consecutive quarter, with total employees at 609,700, down 1.2% sequentially. The attrition rate continued its downward trajectory, falling to 12.1%—the lowest in the last nine quarters.

“We are optimizing our workforce in line with evolving project needs and focusing on deep skilling. Lateral hiring is being done selectively for niche digital and AI roles,” said Milind Lakkad, CHRO, TCS.

Investor Outlook: Cautious Optimism Prevails

TCS shares closed marginally higher at ₹4,260 on the BSE following the earnings announcement, reflecting investor confidence in the company’s long-term prospects. Market analysts maintain a “BUY” or “HOLD” rating with modest upward revisions in earnings estimates.

“TCS’s deal momentum and margin improvements give comfort for FY26 earnings trajectory. However, the management commentary on discretionary spending suggests that investors should brace for near-term volatility,” noted Priya Shah, fund manager at Motilal Oswal AMC.

Brokerages such as ICICI Securities and Jefferies India reiterated their positive stance, projecting a 12-15% upside over the next 12 months, contingent on macro stability and sustained demand in BFSI and retail.

A Resilient Start to FY26

With a 13.2% YoY surge in its order book, TCS has kicked off FY26 on a solid footing, signaling resilience amid global uncertainty. The company’s continued focus on innovation, digital transformation, and strategic partnerships is expected to drive sustainable growth, even as macro headwinds persist. As enterprises recalibrate their tech budgets, TCS’s full-stack capabilities and domain depth are likely to keep it ahead in the global IT services race.