- TCS focuses campus hiring on AI talent to meet rising client demand for AI services
- AI engagements differ from traditional contracts and must be won quarterly
- AI revenue grows as clients adopt Human + AI models for better business outcomes
Tata Consultancy Services Ltd. (TCS) said artificial intelligence (AI) continues to shape its hiring, investment and client engagement strategy, even as the company cautioned that AI-led contracts differ significantly from traditional long-term outsourcing deals.
Speaking during the company's first-quarter fiscal 2027 earnings conference call on Thursday, the management said campus hiring remains heavily focused on AI talent, with the company continuing to invest in building its AI pipeline and upskilling employees to meet rising client demand.
However, TCS noted that AI engagements are fundamentally different from conventional IT services contracts.
"AI deals are not like long-term deals. They have to be won every quarter," the management said, highlighting the dynamic nature of AI-related business opportunities.
The company added that revenue from AI services has been steadily increasing as enterprises accelerate investments in artificial intelligence, while AI governance has emerged as a key requirement for clients adopting the technology.
According to the management, organisations are increasingly favouring a "Human + AI" operating model, where AI augments employees rather than replacing them, resulting in faster execution and better business outcomes.
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The company also said it continues to invest aggressively in AI capabilities, employee training and operational improvements despite near-term cost pressures.
During the quarter, TCS rolled out wage hikes, which impacted margins by around 170 basis points. Despite the additional costs, the company reiterated its commitment to investing in future growth areas, particularly AI and workforce development.
On the business front, management acknowledged that the life sciences vertical witnessed a decline during the June quarter but expressed confidence that the segment would recover in the coming quarters.
Among geographic markets, India emerged as the strongest growth driver during the quarter. Management also said it remains optimistic about client demand and expects spending to improve in the second quarter of FY27.
TCS highlighted that its AI business has reached an annualised revenue run rate of $2.6 billion, supported by a marquee AI-led transformation deal with SKF and continued client additions across key revenue bands.
ALSO READ: TCS Q1 Results: Profit Falls 3% On One-Time Legal Settlement; Margin Contracts Due To Wage Hike
Commenting on the outlook, CEO and Managing Director K Krithivasan said the company is well positioned to benefit from the next wave of enterprise technology spending.
"As customers accelerate investments in AI, modernization, cybersecurity, sovereign cloud and platform simplification, our strong deal conversion, improving client mining and expanding ecosystem partnerships position TCS well to translate opportunity into sustained growth," Krithivasan said.
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