TCS pegs AI revenue at $1.5 billion, $11 billion from new-age services

“If you take ADM (application development and maintenance), testing and BPS (business process services) out, the non-traditional or the new-age services constitute almost $11 billion of our revenue, and all of them are growing at a rate higher than TCS’s average rate," K. Krithivasan, chief executive officer (CEO) and managing director (MD) of TCS, said during the company’s annual investor day on Wednesday.

To be sure, TCS’s $1.5 billion AI revenue cannot be compared to Accenture’s $2.7 billion in AI or what the company calls its ‘advanced AI’ business last year. This is because Accenture chair and CEO Julie Sweet clarified that its advanced AI business includes only Gen AI, agentic AI, and physical AI, and does not include data, classical AI, or AI used in the delivery of its services. TCS has not clarified how it defines AI-related revenue, for now.

On Wednesday, TCS’s management sought to assuage concerns about the impact of Gen AI on outsourcing services and reaffirmed that it does not plan to pare its aspirational profitability target of 26-28%.

Krithivasan told analysts during the company’s investor day that each new technology cycle pushes technology deeper into the heart of business, driving higher spending as its value rises. TCS has consistently turned these transitions—from mainframes to PCs, the internet, and digital—into growth accelerators, he added.

"And of course, what we are seeing today is a new technology in terms of generative AI," Krithivasan said, adding that it’s more a fundamental shift than just a new technology. “It's very different from the previous changes, the technology disruptions we had, because of the scale with which it is going to impact, the speed with which it's going to impact, and the benefits that we can deliver from it."

TCS’s new moves

Mumbai-headquartered TCS, which ended the year ended March 2025 with $30.18 billion in revenue and a 24.3% operating margin, appears to be breaking away from its past conservative approach by making some bold bets in recent months.

First, in October, the company committed to spending $6.5 billion over six years to build 1 GW of data centre capacity. A month later, private equity major TPG and TCS agreed to invest $1 billion in setting up a data centre in Navi Mumbai, Mint reported on 20 November.

Second, over the past three months, acquisition-shy TCS agreed to spend $773 billion to buy two companies—digital marketing services firm ListEngage MidCo for $73 million, and technology consulting firm Coastal Cloud for $700 million.

A third first was on the investor day on Wednesday as it shared revenue from newer business segments.

During the post-earnings call with analysts last month, the management had outlined its ambition to become the world’s largest AI-led tech services company. On Wednesday, it said AI revenue would be a key metric to track to achieve this goal.

TCS vs Accenture

However, much of TCS’s statements on Wednesday appear to be taking a leaf out of its larger rival Accenture’s playbook, which claims that $2.7 billion of its $70 billion in revenue comes from advanced GenAI.

Accenture first started disclosing revenue from cloud and cyber-related areas more than a decade ago in 2014. In September this year, Dublin-headquartered Accenture said it made $39 billion, $20 billion, $10 billion, and $9 billion from its cloud, digital marketing, cybersecurity, and internet of things businesses, respectively.

For now, besides disclosing that it generated $1.5 billion in revenue from AI-related business, TCS has not disclosed how much business it gets from other fast-growing sub-segments, such as cloud and cybersecurity, and has only shared growth figures for some of these businesses.

Further, Accenture added $4.78 billion in incremental revenue in the September-August fiscal year. This was more than the combined incremental revenue generated by India’s 15 largest IT services firms in the year ended March 2025, according to a Mint analysis.

At least one analyst said the IT outsourcer’s pronouncements were partly done to appease shareholders, as its shares have been the worst hit of the country’s top four IT outsourcers this year.

“Shareholder signalling is absolutely part of it," said Phil Fersht, chief executive of HFS Research, a Massachusetts-based IT research firm.

TCS’s shares have fallen 21.47% since the start of the year to trade at ₹3,217 apiece at the close of market hours on Wednesday. On the other hand, shares of Infosys Ltd, HCL Technologies, and Wipro Ltd have fallen 14.8%, 13.76%, and 13.54%, respectively, over the same period.

“With growth under pressure and traditional metrics like headcount and utilization losing relevance in an AI-led delivery model, companies need new proof points to demonstrate future relevance," added Fersht.

Market challenges for TCS

TCS has faced challenges in recent years due to a lack of mega deals and client slippage.

Under CEO Krithivasan, overall growth at TCS has slowed, with the company reporting full-year revenue growth of less than 5% over the past two years.

This slowdown can be attributed to the company's inability to win enough mega deals and to its losing out to peers in both bagging and retaining large contracts. The company is also in the midst of its biggest retrenchment exercise, after it announced in July that it would let go of 2% of its workforce, or about 12,000 employees.

Over the past two years, TCS lost the Zurich Life Insurance deal to Virginia, US-based DXC Technology and its Phoenix Group account to Wipro Ltd. Both contracts were valued upwards of $500 million. It also missed out on the NHS deal won by Infosys in October. Sixth-largest LTIMindtree Ltd also edged TCS to bag its largest deal, worth $585 million, with Paramount Global in the same month.

However, the company recently signed a $1 billion deal with the British arm of Spanish telecom giant Telefonica, according to a Mint report dated 17 December.

At least two brokerages—Kotak Institutional Equities and Motilal Oswal—expect the company to end with a full-year revenue decline.