Tata Consultancy's AI strategy has key-man risk
TCS•Tata Consultancy's September-quarter revenue rose 2.8% in constant currency, while annualized AI services revenue climbed 19% to $3.1 billion. The column argues that chair N Chandrasekaran's involvement in a Tata group power struggle and other companies creates risk as the IT firm faces AI disruption.
1. Quarterly results
Revenue for the three months to the end of September reached 731.88 billion rupees ($7.6 billion), up 2.8% in constant currency terms. Annualized AI services revenue rose 19% from the preceding three months to $3.1 billion, about 10% of revenue. The deal pipeline fell 4% year-on-year to $9.6 billion, and net margin contracted 60 basis points to 19%.
2. Leadership demands
Chandrasekaran, who spent three decades at Tata Consultancy and was its CEO for eight years, has increased his direct involvement as the company pursues deals and builds data centres. He also chairs at least seven other Tata group companies and is in a power struggle with Noel Tata, chair of Tata Trusts, which owns 66% of Tata Sons. The column says CEO K Krithivasan is left to lead Tata Consultancy through AI disruption; since becoming CEO in 2023, its shares have lagged Infosys, HCLTech and Wipro.
