Tough times for the Indian IT sector, and TCS has to set the tone for the entire sector. How was Q4 performance? What will the outlook be going forward? Joining us now are the CFO and CHRO of TCS. Welcome to CNBC Awaaz. First, Sameer sir, the quarterly performance you delivered — about 5.5% quarter-on-quarter jump in rupees, about 2.5% improvement in constant currency. What is your internal assessment of these numbers? Was it broad-based growth across sectors, verticals, and industries, or were there specific segments that helped?
I think this quarter's growth was quite broad-based, and that is on the back of three quarters of sequential growth momentum. So if you look at Q2, Q3, and Q4, sequentially the growth momentum has continued. If you look at this quarter, all verticals have been in growth — except one, CMI, where we expect a turnaround. All markets — the US, Europe, and the UK — have also seen good growth.
Positive. In the meantime, it's been a tough time. Since our last meeting, the narrative has changed a lot. We had many concerns about Indian IT. One question: between that meeting and this one, is the TCS CFO more confident about the environment and the outlook? And second, an interesting highlight in this release was when you mentioned annualized AI revenues crossing the $2.3 billion mark. How should I read this? Are generative AI projects that were previously in pilot mode, test mode — are they now beginning to converge?
Let me address both parts. The straight answer is that I am more confident, more optimistic. Why? If you look at the growth momentum I spoke about — three quarters of growth momentum is good. If you look at our client metrics, we added four clients in the $100 million band, taking the total to 66. So four client additions overall across bands — that has been good. We have 1,400 clients who give us more than $1 million. And this quarter, we won three mega deals — mega deals are where we get $500 million or more in TCV. All three are with existing accounts: one is a large US healthcare player, one is a large US pharma, and one is a UK telecom provider. So good growth momentum, good client additions, and deal wins are what make me confident. And you talked about AI — yes. Last quarter, annualized AI revenue was $1.8 billion. That has gone to $2.3 billion. That's significant growth. The growth is being driven considerably by AI. Last time we met, we talked about how we are trying to infuse AI into various service lines and what we are trying to do on it. That strategy, the five-pillar strategy we discussed, is working.
So then why is there so much concern about AI? Earlier, when business came in, you needed more engineers — those linear organizations we used to call IT. Is AI changing that bedrock, that premise? What is AI doing for you?
So AI, in a way, is creating a win-win situation for everyone. For clients, because work with added efficiency can be done faster. And when clients can get work done faster, on the same amount of work to be done, you save money, right? And you have more money to invest into. And when work can be done faster, things that were backlogged can be delivered. So it becomes a win-win for us because there can be additional amounts of work that can be done. We can showcase our capabilities to the customer and get their confidence. And for employees too, they move into better, higher-order work rather than basic work. So it brings efficiency, which is a win-win for everyone.
So then, the deal wins you're having — are they shifting from effort-based to outcome-based? These new deals worth billions of dollars in this quarter, or the $40 billion in deals for the full year — are they becoming outcome-based? And if so, how are you deciding the effort adjustments? How are you protecting your margins?
Okay, so two things. AI is included in every deal. That is a part of it. The IT services model traditionally has been on effort, and from effort it has evolved. It has evolved into fixed-price, where you lock in a value and deliver the project. And it is gradually shifting towards outcomes. It's not that it will suddenly, overnight shift towards outcomes. The movement is happening but it is quite gradual. It's not going to happen in one year or two years. For the last 15 years, there has been talk of outcome-based delivery. But there has not been much significant movement.
I'll continue on this point, but let me go to Sudip sir. Sudip sir, an interesting point in the press release mentioned that from April, you're going to give salary increments to all employees. All means across the board — no ifs, no buts. And if you are, what quantum of wage hike is TCS preparing for?
We have announced annual increments for all eligible employees — those who are eligible in the annual appraisal cycle, globally across grades, effective April 1st. The increments will be in a similar range to what we gave in the last cycle, and top performers will get double-digit increments.
We're all hearing this. Before I came, people were saying, ask what's going to happen. Because there are concerns about hiring — how many onboardings in Q4? For FY27, it was said you would try to include 40,000-plus freshers. Are those targets, or what targets are you carrying for the next four quarters? How much hiring will you do? How many freshers, how many employees will you recruit?
We are hiring and will continue to hire for meeting our demands. We are happy to say that last year we onboarded almost 44,000 trainees in the last financial year, and TCS continues to be the largest tech talent funnel of entry-level talent from universities. And we have already done 25,000. So we will continue to do the same thing.
I recall a statement — in discussions on our network, CEO Kirti ji said that AI won't kill jobs. So in simple terms, there won't be mass layoffs or anything like that. My concern isn't that it will kill jobs. Until now, Indian IT was very important for us from a macro perspective because freshers coming out of B-schools were largely recruited by Indian IT. Will that pace of recruitment slow down when you're infusing more AI into your business verticals?
No. As Sameer ji mentioned, AI gives you an advantage and an opportunity to do things faster, so your efficiency is improving. You are doing things faster, you are doing it efficiently. So what happens is there are willing customers who are willing to invest more, so that creates a lot more opportunities. The key thing is to see how you can create that capability among talent to be able to embrace that opportunity. So we are extensively investing in our learning capabilities on all critical skills, beginning phenomenal adoption from our associates, and to that extent we have seen a 25% increase in effort that people are voluntarily spending on improving their proficiency. And also, as a responsible employer and what we have always built as a brand, TCS and part of the Tata Group, we continue to engage with universities, faculty in course creations, in faculty development, student things. So we go back and stay true to what we are in building capability, so that we keep our talent and our country ahead in terms of this whole AI transformation.
