MUMBAI, INDIA – Tata Consultancy Services (TCS), a leading information technology and consulting services provider, has reported a robust financial performance for the first quarter of fiscal year 2025, surpassing analysts’ expectations.
Financial performance highlights
TCS’s net income rose by 9% to ₹120.4 billion ($1.44 billion) in the first quarter ending June, exceeding the average analyst projection of ₹119.59 billion ($1.43 billion).
Sales also increased by 5.4%, reaching ₹626.1 billion ($7.2 billion). This growth indicates that corporations are resuming spending on projects to leverage advanced technologies like artificial intelligence.
TCS, a leader in India’s $250 billion tech industry, is focusing on AI and machine learning to drive corporate investment in IT systems. The company is also betting on its partnership with OpenAI-backer Microsoft Corp to develop AI-based software services for its clients.
TCS Chief Executive Officer K. Krithivasan expressed confidence that this partnership will generate “significant revenue” within a few quarters.
“My view is the interest will keep increasing. We will identify newer use cases, we will understand how this technology has to be deployed over a period of time, and then you will start seeing it become mainstream,” he said.
Outlook amid global challenges
Despite global economic uncertainties and geopolitical conflicts, including the ongoing war in Ukraine, TCS remains optimistic about its growth prospects.
“We still believe it’s too early to call whether the growth momentum is sustainable, because the market conditions continue to remain the same as they were last quarter,” said Krithivasan during a news conference in Mumbai.
However, the company expects the financial year through March 2025 to outperform the previous year. TCS shares closed up 0.4% in Mumbai before the earnings announcement and have gained 3.4% this year, fueled by expectations of increased IT spending.
“Though weak economic conditions might hurt growth into fiscal 2025, which began Apr 1, TCS will likely benefit in the long term as companies spend more on digital initiatives and increase their offshore IT footprints,” noted Bloomberg Intelligence analysts Anurag Rana and Andrew Girard.
They added that TCS could expand sales by high-single to low-double digits during normal economic times.
