Tata Consultancy's AI strategy has key-man risk
TCS•Tata Consultancy's quarterly revenue rose 2.8% in constant currency to about 732 billion rupees, while annualised AI services revenue increased 19% to $3.1 billion. The article says chair N Chandrasekaran's commitments across the Tata group raise questions about his bandwidth to guide the company through AI disruption.
1. Quarterly results and AI revenue
Revenue for the three months to the end of September was 731.88 billion rupees, up 11% year-on-year and 2.8% in constant currency. Annualised 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. Chandrasekaran's commitments
Chandrasekaran has increased his direct involvement at Tata Consultancy in recent months, alongside deals including the acquisition of Porsche's automotive and consulting unit and the takeover of Best Buy's global capability centre in India. The company is also building data centres, with OpenAI among its customers. The article notes that Tata Consultancy contributed 89% of Tata Sons' profit for the 2026 financial year, while Chandrasekaran chairs at least seven other group companies.
3. Leadership uncertainty
Chandrasekaran is engaged in a power struggle with Noel Tata, chair of Tata Trusts, which owns 66% of Tata Sons. The article says the dispute could limit the time he can devote to operating companies and raise questions about how long he will remain in his role. CEO K Krithivasan took over in 2023, and Tata Consultancy shares have lagged Infosys, HCLTech and Wipro since then; the shares rose as much as 4% on Friday morning after faster AI revenue growth.
