TCS onboarded a record 10,000 fresh graduates in Q2 FY27, significantly higher than the 14,000 freshers hired in Q1 FY27, as reported by Business Standard. The company's total headcount reached 598,056 employees at the end of June 30, 2026, representing an addition of 4,258 employees during the quarter. Chief HR Officer Sudeep Kunnumal confirmed that hiring will continue to track client demand, stating "We are hiring for demand, and we definitely see good demand for these technologies, so we will continue to hire." The company's hiring strategy continues to balance experienced talent, early career talent and internal competency while focusing on strengthening AI and domain expertise. IT services attrition remained stable at 13.3% for the quarter, while learning hours increased 17% sequentially to 17.1 million driven by investments in critical skills and upskilling initiatives.
TCS shares surged nearly 6% on Friday following the earnings announcement, reflecting investor confidence in the company's growth strategy despite challenging market conditions. The stock jumped 5.85% on the Bombay Stock Exchange, demonstrating strong market support for the company's approach to prioritizing market share and AI deal pipelines over operating margins. The company's shares closed below the flatline at ₹2,077 ahead of the results announcement, with the stock down 36% so far this year before the positive reaction. At least four brokerages said the Mumbai company's performance was broadly in line with estimates, with analysts noting that the improving mix across BFSI, manufacturing, and technology services provides visibility for sustained momentum in international markets. Brokerages also praised TCS's AI order book performance, with annualized AI revenue growth remaining a key positive at around 19% quarter-on-quarter to $3.1 billion.
TCS reported consolidated revenue of $7.64 billion in Q2 FY27, up 0.2% sequentially and 2.36% year-on-year, demonstrating strong sequential momentum that beat the analyst forecast of $7.55 billion. Much of this growth was driven by banking clients, offsetting a revenue drop in India, though the performance still marked the company's slowest second-quarter growth in three years. In constant-currency terms, revenue growth stood at 0.5% QoQ, in line with the lower end of the 0.5-0.8% expectation, with revenue slightly ahead of the estimate of ₹73,026 crore. Earnings before interest and taxes rose 1.4% sequentially to ₹17,553 crore, with margins rising marginally to 24% from 23.95% in the first quarter. Employee costs stood at ₹41,890 crore in Q2 FY27, down 0.59% sequentially from ₹42,137 crore in Q1 FY27, though they increased 8.51% year-on-year from ₹38,606 crore in Q2 FY26. International revenue grew 1.2% QoQ in constant currency terms, with BFSI leading growth at 2.5% QoQ in constant currency terms, while Manufacturing and Technology & Services both grew 3.1%. Total contract value (TCV) stood at $9.6 billion during the quarter, demonstrating strong deal momentum across the portfolio.
TCS achieved a significant milestone with AI revenue crossing the $3.1 billion mark during Q2 FY27, now contributing to more than 10% of the overall company topline for the first time. This represents a substantial increase from previous quarters and demonstrates the company's successful execution of its AI-first strategy. TCS Executive Director, President and Chief Operating Officer Aarthi Subramanian said, "AI momentum remained strong during the quarter for TCS. Demand for delivering business outcomes with AI-native solutions, AI-led transformation of enterprise systems and autonomous GBS, continues to accelerate." AI revenue rose from $2.6 billion in Q1FY27, representing a sequential increase of around 19%, with management noting that AI revenue is being generated at much higher margins than overall revenue, making the growth particularly considerable from a profitability perspective. Management highlighted three distinct demand patterns for AI, including AI-native solutions with business outcomes, AI-led transformation of enterprise systems, and clients prioritising software and hardware modernization to house AI. Management also attributed much of the margin drag to TCS's $373-million acquisition of Porsche's IT and consulting unit, MHP, announced in August, with the deal expected to shave 50 basis points off operating margins later this fiscal year.
TCS's operating margin remained flat at 24% for the second consecutive quarter, marking the first time margins have not improved in recent quarters despite favorable currency movements. Management attributed this pressure to rising subcontractor expenses, warning that maintaining profitability in the coming months will be challenging as the company continues investing in strategic partnerships to future-proof its business. Amit Chandra, vice-president of HDFC Securities, attributed this to "growth being in line with expectations but margins were on the lower side during a time when it was expected to expand. This had to be done in order to win more deals as they now have to prioritise growth, which is coming at the cost of margins." Manav Medewala, research analyst at Mirae Asset Sharekhan, noted that "the lack of operating leverage despite favourable currency movements suggests that underlying pricing pressure may be stronger than anticipated, with management seemingly reinvesting a large part of the currency benefit back into delivery and execution." For TCS to match its revenue of $30.02 billion in the previous fiscal year, the company needs to report an average of $7.38 billion in revenue in each of the next two quarters, though much of the growth is expected to be fueled by acquisitions. Expenses related to subcontractors increased to 6.8% of revenue in Q2 FY27, up from 5.9% in Q1 FY27, with the need for more subcontractors potentially due to visa restrictions in the US.
TCS share price is unlikely to see a sharp result rally on Friday, and the stock can see a slightly positive opening followed by range-bound movement throughout the day, according to Tushar Badjate, Director, Badjata Wealth1 Pvt. Ltd. "Technically, ₹2,000 is the level I'm watching. The stock found support there after the August fall. If it holds, ₹2,250 to 2,300 is possible over the next few months," he explained. For Friday, I'd expect it to trade somewhere between ₹2,080 and ₹2,200, as reported by multiple market experts. The positive sentiment comes despite concerns about AI growth offsetting weakness in legacy business, with analysts noting that AI is not adding to the business yet, rather it is eating into the older business. HDFC Securities' Amit Chandra added that TCS will take another three quarters to accelerate growth, citing "a change in macros that will push discretionary spending towards IT, second is that revenue from new age services must increase at a faster pace, thirdly, deflation has to reduce while AI models and agents become part of pricing, which will translate to growth." Most concerns about future growth stem from geopolitical uncertainty, which is forcing clients to pull back on technology spending. TCS management said it expects client spending to improve but did not provide revenue guidance, with the slow quarter making it harder to speed up in the second half of the fiscal year which has fewer working days because of holidays. TCS has hired for three consecutive quarters, adding 13,537 jobs in the first half of FY27, with the company maintaining its hiring momentum despite broader tech industry layoffs that have impacted 191,518 people across 633 tech companies in 2026 compared to 245,953 people across 783 companies in 2025.
