TCS announces the largest AI pivot in the midst of subdued Q2 outing

Tata Consultancy Services (TCS) Ltd reported its worst successive growth in the second quarter in six years, even though India’s largest software service provider promised to set up AI data centers with at least $ 6 billion in about six years, which was the biggest pivot since the first quarter of the first quarter, with a first quarter of the first quarter, but An annual year -on -year, but year -on -year year -on -year, but year -on -year year -on -year, but year -on -year on an annual basis, but year -on -year on an annual basis, but year -on -year, but year -on -year. Annual turnaround in the second quarter. On a quarterly basis, more than three fifths of its incremental income comes from banks and financial institutions, which make up a third of TCS’s business. TCS’s performance exceeded analysts’ $ 7.35 billion expectations in revenue in the September term. The Mumbai-based software services business nevertheless lost $ 288 million in the first half of the financial year, by 1.9% lower than a year earlier. However, in an effort to find better growth possibilities, the company has announced its intention to strengthen its AI pressure, with plans to set up a 1 GW AI data center in India through a new business unit. “We expect to reach 1 GW over a period of five to seven years, and our calculation is approximately every 150 MW about a billion dollars,” CEO K. Krithivasan said in a call to earnings with analysts. “Just to provide more information is our current goal of providing all passive components. Who (the client) is occupying will bring in their computer storage,” he said. He added that the company intends to sell these data services to the “Pure Play AI providers, the deep technical companies and the hyperscalers, and to a large extent need the government in India and Indian businesses.” A billion dollar for every 150 MW is about six and a half years of investment worth about $ 7 billion in total. To put this into perspective, the money that TCs would plow into the data centers is about the size of Tech Mahindra Ltd, the country’s fifth largest IT services business. “It’s not that we’re going to put all the money in year one. And we also explain that it would be a combination of equity and guilt, and we will also bring in cash partners for the equity,” Krithivasan said. TCS also announced a $ 72.3 million buyout of the US Listengage, which was the largest acquisition of the Mumbai business in over 12 years after the French IT services firm Alti bought for 75 million euros in 2013. Listengage is a marketing technology firm. “We see that the growth of the FY26 revenue is better than the last financial year. The spending of IT services is steady, with no significant change expected in the short term,” Krithivasan said during the call. Mounting Challenges Crithivasan, under whose stewardship the company reported a consecutive revenue finish in four of the last nine quarters, faces an uphill task to send the company through internal and external links. On July 27, the company announced that it would dismiss more than 12,000 employees at the middle and junior level that could not be trained and redeployed at new technologies. “We have released one percentage of our workforce, mainly middle and senior level with misappropriation of skill and abilities. We offer the affected employees, benefits, counseling and outdoor placement support for their transition, as well as severance officer who is higher than the industry standards,” Supeep Kunnumal said, the head of human resources said during the call. The company ends September 2025 with 593.314 employees, 19.755 less than the previous term. To put this into perspective, the number of people who have left TCs alone over the past three months is more than 15,784 people who have been added by the Mumbai business over the past three years. In August, the company announced a new unit “AI and Services Transformation” under the leadership of Amit Kapur. This is the third AI unit in so many years, highlighting uncertainty regarding TCS’s policy on AI, which automates work and leads to fewer invoices. However, management was very good at the earnings call with analysts. “We expect every project we do to be,” Krithivasan said, adding that ‘overall size of involvement or the size of involvement would certainly increase, but there will be productivity benefits that customers would get in the individual project, and we will also get some productivity benefits to do this project, because we will utilize AI. ” Certainly, TCS does not reveal income from Gen AI or even order discussions from the new technology. This is in contrast to a larger peer -to -accenture, which announced $ 2.7 billion in revenue from the new technology and $ 5.9 billion in order of discussions. TCS’s AI challenge comes when it faces challenges in the US, its largest market. On September 19, US President Donald Trump raised the H-1B visa application fee to $ 100,000 from next year-these permits allowed foreigners to work on specialty roles in the US. Less than a week later, Charles E. Grassley and Richard J. Durbin, right committee members, wrote to CEO Krithivasan about the company’s rental practices, claiming that TCs are being investigated to shoot older US workers in favor of newly hired South Asian H-1B employees. The emphasis on IT services started on September 5, when Bernie Moreno, Senator of Ohio, proposed the Halting International Relocation of Employees (Hire) Act to impose tax on companies that outsource it. The management of the company said it would adapt to changes in immigration policy. “On H-1B we have significantly localized our workforce in the US. About 500 employees traveled to the US on H-1B. We believe that our business model will be able to adapt quickly to any changes in immigration policy,” Kunnumal said. According to US government data, TCS 5.505 H-1B visas received these fiscal, making it the second largest beneficiary of such permits to Amazon, which received twice as much. Profit drops the company in July-September with an operating margin of 25.2%, with 70 basis points consecutive. However, this does not include a one -time restructuring cost of $ 129 million. A base point is a hundredth of a percentage point that was a different case of concern was the net profit. The company finished the last quarter with a net profit of $ 1.46 billion, with 1.94% consecutive. It also announced a £ 11 dividend. The management, which does not provide a quarterly or full annual guidance, is careful and mentions that the non-essential demand was uncertain. “The prolonged uncertainties in the broader economic environment remain an important challenge. Companies are holding close control of their discretionary budgets in response to economic and demand volatility. Customers consolidate sellers to achieve transformation goals effectively and effectively,” Krithivasan said. Manik Taneja, executive director of IT services at Axis Capital, said: “The company has made a small tug in the acquisition of a Salesforce partner, Listengage, only since Alti in 2013, as well as the intention to draw up a 1GW AI data center in India, which is interesting.” TCS’s shares rose 1.16% by £ 3,061.95 compared to a 0.49% increase in the BSE Sensex Thursday, before the results released to market times. TCS’s uncertain prospects are expected to have an intoxicating effect on smaller counterparts, announcing their earnings next week. Infosys Ltd and Wipro Ltd will report their results in the second quarter on October 16, while HCL Technologies Ltd and Tech Mahindra Ltd announce their earnings on October 13 and October 14, respectively.