Open Interest | TCS Optimism Is Tempting, But Is The Industry Geared For A Rollercoaster Ride?

Tracking TCS' performance since its listing reveals the company’s ability to adapt swiftly despite its massive scale. TCS, often referred to as an elephant that can walk, run, turn, and even dance, has transformed its market position over the years. While it once traded at a discount to Infosys, TCS now commands a 10% premium over its closest peer—despite recent stock price declines. The company’s 6.07 lakh employees have consistently churned out revenue and growth year after year, barring any unforeseen events.

At the end of fiscal 2010, TCS and Infosys had a revenue gap of $1.5 billion. Cut to current times, at the end of fiscal 2025, this gap has widened to a striking $10.5 billion, with TCS surpassing $30 billion in revenue while Infosys remains shy of $20 billion.

Tracking TCS' performance since its listing reveals the company’s ability to adapt swiftly despite its massive scale. TCS, often referred to as an elephant that can walk, run, turn, and even dance, has transformed its market position over the years. While it once traded at a discount to Infosys, TCS now commands a 10% premium over its closest peer—despite recent stock price declines. The company’s 6.07 lakh employees have consistently churned out revenue and growth year after year, barring any unforeseen events.

At the end of fiscal 2010, TCS and Infosys had a revenue gap of $1.5 billion. Cut to current times, at the end of fiscal 2025, this gap has widened to a striking $10.5 billion, with TCS surpassing $30 billion in revenue while Infosys remains shy of $20 billion.

Analysing the compounded annual growth rates, TCS has grown by 10.2% over a 16-year period, 6.2% over a 10-year period, 6.4% over a 5-year period and 1.6% over the last three year. In comparison, Infosys had a 16-year CAGR of 9.2%, 10-year at 7.6%, 5-year at 7.8% and 3-year at 1.6%.

TCS, like all IT companies, has been under the tariff cloud and this has delayed new orders and project ramp-ups. Additionally, a ramp-down in the BSNL order contributed to weaker sequential Q4 results. International business revenue grew by 0.6% sequentially (excluding India) and this has helped TCS retain its fiscal 2026 guidance, expecting better performance than fiscal 2025, during which it grew 3.8% in dollar terms. The company’s outlook is based on its strong order book with no decline in the weighted average tenure of deals in reported quarter.

The company disclosed total orders of $12.2 billion in the March 2025 quarter, compared to $13.2 billion in the year-ago period, which had included large deals. For the year, total deal values stood at $39.4 billion. Although discretionary spending may decline due to tariff uncertainties, TCS anticipates that cost-efficiency projects will replace these, as clients shift their focus to profitability. Cost-control measures and AI-embedded efficiencies are expected to drive the next growth phase for the IT sector. Vendor consolidation and delayed technology upgrades since Covid-19 also present new opportunities for Indian tech firms.

The ongoing tariff war will impact US manufacturing, consumer goods, and retail, driving technology transformation and spending. Many companies have yet to upgrade their systems post-Covid, creating project opportunities for IT vendors. In Europe, IT spending is projected to rise as fiscal investments in capex, aerospace, and defence increase, offering fresh opportunities for Indian IT firms.

While AI-embedded orders have been slow to take off, adoption may accelerate amidst growing uncertainty and new large order are seeking building in AI efficiency in bids. However, insourcing trends present a potential challenge; their impact may remain muted for now but could grow if ramp-downs are not offset by new orders.

The first earnings report from the tech sector was not as bleak as anticipated, and after the nearly 30% fall in stock prices from their peak, the prices appear to have accounted for tariff-related downsides. The key question remains: Can Indian IT companies turn this adversity into an opportunity to deepen engagement with U.S. clients in non-BFSI segments?