North America finally showed growth after two years of decline, though the recovery is expected to be gradual.
Rising demand for AI services and a two-year recovery in its largest market helped Tata Consultancy Services exceed revenue forecasts for the October-December quarter on Monday.
For the three months that ended on December 31, the Indian software company reported sales of 670.87 billion rupees, or $7.44 billion. This exceeded market experts’ projections of 666.76 billion rupees and represented a 4.9% increase, according to LSEG data.
The results showed growth even during a typically slow period when many companies reduce their spending at year-end. TCS stated that its AI-related work now brings in $1.8 billion annually, accounting for roughly 5.8% of total revenue.
Business improved in five of the eight regions where TCS operates. The Middle East and Asia led the way with 8.3% growth, while Continental Europe expanded by 3.5%.
The most notable change came from North America, which accounts for nearly half of what TCS earns. That market grew for the first time since the July-September period of 2023.
“The North America market has risen as the demand slowdown has bottomed out but we expect a gradual recovery as structural weakness continues,” said Ambarish Shah, who follows the company for Systematix.
Companies that buy services from India’s $283 billion information technology sector have been careful about spending money on new projects due to worries about the American economy. Worries about the American economy have made them hesitant.
Additional concerns include possible U.S. tariffs and a proposed $100,000 fee for work visas.
Despite the revenue increase, TCS saw its profit drop 14% to 106.57 billion rupees. That fell short of the 130.24 billion rupees analysts had forecast. The company pointed to one-time costs from cutting jobs, expenses related to new Indian labor laws that took effect in November 2025, and various legal bills.
The value of new contracts signed during the quarter totaled $9.3 billion, down from $10.2 billion in the same period last year. TCS secured eight new deals, the highest number among India’s five largest IT companies, with clients including British grocery chain Morrisons and Danish phone company Telenor.
The company announced it will pay shareholders 11 rupees per share, plus an additional special payment of 46 rupees per share. Its stock price in Mumbai rose 1.3% before the results came out.
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