Tata Consultancy Services Ltd Management Discussions

Overview of the Industry

The year 2024 began with signs of improved economic activity across major regions. The world GDP grew at a steady rate of 3.3%T Despite divergent growth patterns across regions and sectors, the global technology landscape demonstrated unexpected stability.

However, in recent weeks, the global outlook has turned negative, as governments worldwide adjust their policy priorities, leading to unprecedented levels of uncertainty. The rapid escalation of trade tensions and extremely high policy uncertainty are anticipated to significantly impact global economic activity. Projections indicate that global growth will decline to 2.8% in 2025 and 3% in 2026¹. Amid these ongoing macroeconomic challenges, new discretionary projects requiring technology investments will face increased scrutiny and require stronger justifications for return on investment.

In 2025, enterprises will be accelerating adoption of AI into their digital core, to address technical debt and modernize legacy systems. This will require efforts in cloud migration, updating infrastructure frameworks and developing a strong data foundation. Enterprises also face a complex risk landscape with cybersecurity threats and geopolitical tensions, making them prime targets for cybercriminals due to their valuable intellectual property and customer data. Enterprises will continue to strengthen their cybersecurity management processes, leading to continued investments in security consulting services².

TCS Business

An Overview

TCS is an IT services, consulting and business solutions organization partnering with many of the worlds largest businesses in their transformational journeys for the last 57 years. With a global presence and deep domain expertise across multiple industry verticals, TCS offers a comprehensive portfolio of

services and offerings - grouped under application development and management, digital transformation, AI, data and cloud services, engineering services, cognitive business operations, cyber security, and products & platforms - targeting every C-suite stakeholder.

The Company leverages all these capabilities and deep contextual knowledge of its customers businesses to create bespoke, high quality, and impactful solutions designed to achieve differentiated business outcomes. These solutions are delivered through its operating model which enables a highly distributed, Location Independent Agile™ delivery.

TCS geographic footprint covers North America, Latin America, the United Kingdom, Continental Europe, Asia Pacific, India and Middle East Africa.

TCS considers industry verticals as its primary go-to-market business segments. The five key vertical clusters are: Banking, Financial Services and Insurance (BFSI), Communication, Media and Technology (CMT), Consumer Business, Life Sciences and Healthcare, Manufacturing and Others such as Energy, Resources and Utilities, Public Services and Products.

Strategy for Sustainable Growth³

TCS has successfully navigated through multiple technology cycles since its inception, transforming and adapting each time to build relevant new capabilities and helping its clients realize the benefits of that innovative technology. TCS responsiveness, agility and adaptability to change have been core to its longevity.

Customer-centricity is at the heart of TCS strategy, organization structure and investment decisions. TCS customer centric world-view helps spot trends early, embrace business opportunities by making the right investments and mitigating risks while discharging its social and environmental responsibilities. TCS has been broadening and deepening customer relationships by continuously looking for new opportunities and newer areas in their businesses to add value, proactively investing in building capabilities, reskilling its workforce, and launching innovative services, solutions, products, and platforms to address those opportunities.

In the last few years, the Company has been using its investments in research and innovation, emerging technologies, its intellectual property and deep contextual knowledge of the customers business and technology landscape to proactively pitch ideas and solutions designed to improve the clients topline and help drive competitive differentiation.

TCS Strategic Responses to Opportunities and Threats

Technology disruption is blurring traditional industry lines, making cross-industry expertise an imperative. Adaptation is the key to survival. TCS has been perpetually adaptive, staying relevant to its customers through various economic and technological cycles. TCS has scaled its capabilities by reskilling talent. The Companys research and innovation team apply scientific rigor and a collaborative mindset to solve pressing problems faced by industries and society.

An ever evolving and changing landscape leads to identifying key growth opportunities. Over time, TCS strategy has resulted in deep and enduring customer relationships, a vibrant and engaged workforce, industry-leading profitability, a steady expansion of the addressable market, and a proven record of accomplishment in delivering longer term stakeholder value.

Enabling Investments

Talent Management

TCS enjoys a distinct competitive advantage and continued success because of its best-in-class talent practices. TCS fosters a vibrant workplace by promoting passion, lifelong learning, and collaboration. The core values of Leading Change, Integrity, Respect for Individual, Excellence and Learning & Sharing strongly bind and unify the 607,979 associates representing 152 nationalities globally.

TCS continues to drive a high-performance culture, recognizing and rewarding potential talent with over 110,000 promotions in FY 2025. The Company has been acknowledged as a Global Top Employer for the 10th consecutive year and has received over 100 awards for its HR practices, further strengthening its brand.

Talent Acquisition

TCS follows an analytics-driven, agile hiring ecosystem which enables global scaling, while maintaining local nuances in building a heterogeneous workforce. TCS is one of the largest job creators in IT services in several major markets and is the preferred employer for both entry-level and lateral hires. In FY 2025, TCS was one of the first IT Services companies to visit campuses for freshers recruitment, hiring 42,000 freshers as planned.

Talent Development

TCS is dedicated to fostering growth by creating a future-ready workforce and promoting lifelong learning. Every TCS associate is encouraged to take charge of their learning and career growth.

TCS has increased its fulfillment through internal talent pools by re-skilling and ready-to-deploy trainee availability.

GenAI-powered tools like Interview Coach, Coding Tutors, Simulators, Content Creators, and AI communications coach have been rolled out to improve experience and efficiency in Talent Development. Initiatives like Internal Internship and Account Talent Grid driven skilling build talent readiness for critical skills. Multiple new programs were launched to develop specialized capabilities in Large Program management, Consulting, Sales, and GenAI for Design. TCS has been ranked #1 in AI and Data certification across major hyperscalers and GitHub.

Competitive Compensation

Compensation levels are merit-based, determined by qualification, experience levels, special skills (if any), and individual performance. Compensation structures are driven by prevailing practices in each

country that TCS operates in. Across the enterprise, remuneration is the same for men and women working full-time, in the same grade, in the same role, and at the same location.

Talent Engagement

The talent engagement strategy of TCS is anchored in Engagement with Purpose (EWP) - a model that places the associate at the center of the integrated approach. The focus on associates health and wellbeing is a key priority, and includes comprehensive physical, financial, emotional, and social support programs, emphasizing hyper-engagement and reinforcing the sense of #OneTCS.

Employee Retention

TCS values-driven culture, progressive HR policies, and investment in people have fostered a strong sense of belonging. By nurturing leaders from within, TCS has developed a deeply acculturated mid-layer with long tenures, ensuring seamless succession into senior leadership roles. This mid-layer integrates new talent and adds significant value through their contributions and contextual knowledge.

All these efforts have helped the Company to remain a benchmark in talent retention, with IT services attrition at 13.3% for FY 2025. At TCS, three months notice is required from either side for termination.⁴

Equal Opportunity⁵

TCS is dedicated to promoting an inclusive culture within its workforce. As an Equal Opportunity Employer, TCS actively supports the Social Sustainability Pillar of the ESG framework through various initiatives aimed at cultivating a culture of inclusion. This inclusive environment is crucial for driving innovation, fostering creativity, and shaping business strategies. The employee demographics in different regions are shown in the image below:

Research and Innovation

TCS Research and Innovation has been investing into two types of initiatives:

• Future of Technology Initiatives, aimed at tracking and developing novel technologies and platforms to accelerate technology adoption. They cover several core IT areas, including sensing, communication, computing, data

and knowledge engineering, digital and physical AI, and experiential technologies.

• Future of Work Initiatives, aimed at infusing emerging technologies to create new practices for work, focusing on various IT, business, and societal work domains.

Anticipating the rise of quantum sensing, TCS entered a partnership with IIT Bombay to develop Indias first Quantum Diamond Microchip Imager, set to revolutionize semiconductor manufacturing. TCS helps clients tackle complex problems with quantum tech and prepare for challenges like quantum-safe cryptography.

More details on TCS R&I investments during the year are available on Page 73 of Boards Report in the section on Technology absorption, adoption and innovation.

Artificial Intelligence and Cloud

TCS is investing extensively in AI to redefine many knowledge work domains, such as software engineering, technology modernization, marketing, energy management, drug discovery, accelerated diagnosis and personalized cure, among others.

For physical work domains, such as logistics and warehouse management, TCS is developing versatile, intelligent robots and platforms to orchestrate an ensemble of robots and people.

As AI crosses the enterprise adoption chasm, TCS expects data, models, and agents to become increasingly industry or function- specific. To support this, TCS is making focused investments in several areas:

• AI-first Software Development, Maintenance and Operations: A differentiated TCS PoV on enterprise-grade AI-infused SDLC, IT & Business Process Operations, integrated with responsible AI tooling and TCS & partner IP.

• AI-native Application Modernization: Combining deep TCS contextual knowledge of legacy application estates and pairing GenAI with TCS MasterCraft™, TCS Crystallus™ and agentic modernization capability in WisdomNext™ to help customers transform their technology estate with AI.

• AI Reimagined Value Chains powered by Data, Models and Agents: Numerous packaged use-cases and autonomous agents are already catalogued in TCS AI platform, WisdomNext™.

• Partner-led AI Co-innovation: TCS has set up dedicated geo-spread partner teams to deepen co-innovation with major hyperscalers and other important ecosystem players. ^•

• Strategic Advisory: TCS AI Advisory and Consulting capability blends strategy and scaled execution to help CXOs navigate technology fit, value realization, talent impact and emerging regulation (for example, the EU AI Act).

In recent years, market adoption of Cloud has matured to hybrid multi-cloud configurations, requiring seamless integration with private/on-premise systems, future cloud native architectures, AI thought leadership and synergies across many services to deliver the outcomes for the customers. To capitalize on this growth potential in overall Cloud space, TCS has formed full-stack teams in offerings, engineering, sales, solutions, and platform-based operations.

TCS is also doubling down on its world-class advisory team within the central cloud unit to help customers navigate the complexity and cost dynamics of the ever-changing cloud environment.

To bolster cloud partnerships across hyperscalers and other major cloud players, TCS has established a well-networked geo-spread alliance team to closely nurture partner relationships, foster co- engineering, and develop joint go-to-market strategies with an aim to hold the elite partner positions.

TCS continues to invest in training, certifications, credentials and in building solutions and intellectual property around hybrid multi-cloud services. The Company has also invested in content partnerships and GenAI playgrounds to enable AI literacy and deep skilling of employees.

In view of the increasing number of large enterprise data transformation programs, TCS is strengthening teams across areas such as streaming data, observability, MLOps, and compliance tooling.

Products and Platforms

TCS offers a robust suite of products and platforms that drive digital transformation across industries. Its flagship solutions such as ignio™, TCS BaNCS™ and TCS iON™ are designed to enhance agility, efficiency, and customer experience. These solutions leverage cutting-edge technologies including AI, cloud, and analytics to deliver scalable, secure, and future-ready enterprise solutions.

TCS ignio™ introduced Code Accelerator, an advanced GenAI powered tool designed to automate code generation, significantly reducing time to value for customers. It has been deployed across 80% of SaaS customers, boosting productivity by 150%.

TCS BFSI Products and Platforms offers comprehensive solutions for the entire financial services value chain, focusing on Insurance and Capital Markets. As a pioneer in the BPaaS model, TCS delivers end-to-end operations using its software for the Insurance industry. This product is now enhanced with AI and is globally available across TCS solutions under the Serviced by Software paradigm.

At the heart of this business is TCS BaNCS™, designed to help financial institutions accelerate time-to-market, quickly launch products and improve operational efficiency. The TCS BaNCS Digital Core is complemented by Intelligent Experience solutions, which enhances end-customer experience using innovative technologies for digital engagement; and by TCS Quartz™, which

provides the innovation edge to the Digital Core. TCS Quartz™ launched four new solutions in FY 2025, including Intelligent Insights (GenAI-based reporting), and solutions for emerging trends like Digital Identity, ESG Compliance, and Land Registration.

TCS iON™ assessed more than 64 million candidates and launched 270 Learning programs and 48 assessment products.

TCS ADD™ platform went live for Tata Medical Center ISCALL study for fighting Childhood Acute Lymphoblastic Leukemia in India. The study will be run for 10,000 patients covering over 30 sites.

TCS MasterCraft™ is a suite of GenAI-driven intelligent automation products for development and enterprise modernization of applications and data made significant achievements in FY 2025. The product processed 16 million lines of legacy code for modernization, delivering a productivity improvement of 20-30%; generated 125.5 million lines of new code through Low-Code No-Code, with over 50% productivity gains; processed 2.2 billion records for data privacy and 2.98 billion records for data quality.

Scaling Presence in Growth Markets

Growth markets are characterized by rapidly evolving regulatory landscapes, a burgeoning digital economy, and a pace of technology adoption that often surpasses that of mature markets. TCS stands out in these markets due to its early investments and strong board & C-level relationships, enabling strategic customer engagement, anticipation of industry shifts, and large-scale digital transformation. TCS capability in delivering large system integration and transformational projects of national importance in India like BSNL, Passport Seva, Election Commission etc. further differentiates the Company.

Growth Markets require agile, cost-effective solutions, tailored for first-time digital adopters. TCS strategy in these markets is anchored in four key pillars: deepening client relationships, expanding the services portfolio to include new-generation services, leveraging TCS IPs and partnerships, and investing in areas such as energy transition, smart cities, and public services. The Companys unique differentiation lies in its deep client connections, contextual knowledge, domain expertise, and ability to co-innovate with customers through dedicated innovation hubs and research partnerships like TCS GoZero Hub.

Navigating macroeconomic and geopolitical shifts is integral to TCS Growth Markets strategy. The Companys localized presence, strong client relationships, and diversified industry exposure allow it to mitigate risks while capturing new opportunities.

This strategic diversity enhances resilience, ensuring that the

Company continues to deliver value to its clients, even amid global uncertainties.

Branding

TCS continues to strengthen its brand through strategic investments and global partnerships, anchored by its enduring promise, With you for the long run. To compliment this, the Company recently introduced the Perpetually Adaptive Enterprise narrative, highlighting its long-term vision and commitment to helping clients stay resilient, agile and adaptive in a constantly evolving world.

TCS significantly expanded its brand presence through its premier sports sponsorship portfolio. Last year, TCS partnered with the Sydney Marathon, the first city in the Southern Hemisphere to join the majors circuit and became the official AI and technology partner of the Schneider Electric Marathon de Paris. With 14 major running events worldwide, TCS running sponsorships collectively generated US$2.25 billion in economic impact for host cities and helped raise over US$279 million for charities.

TCS is also the principal partner of Jaguar TCS Racing, leveraging advanced technology to promote sustainable innovation and help accelerate the electrification journey in motorsport. In 2024, Jaguar TCS Racing won the ABB FIA Formula E Teams World Championship.

These high-impact partnerships boost TCS global visibility and reinforce the Companys commitment to endurance, progress and shared purpose. In recognition of its sustained investment, TCS was named among the Top 50 global brands across all industries in 2024 by Kantar BrandZ, retained its position as Indias #1 brand, and was valued by Brand Finance at US$21.3 billion, making it the second most valuable brand in the global IT services sector. TCSs brand awareness among business executives has reached 95%, reflecting the continued growth and recognition as a global brand.

Together, these brand-building efforts demonstrate TCS vision and commitment to creating an adaptive, inclusive, and resilient future with clients, communities, and employees.

Financial Performance Overview

The discussions in this section relate to the consolidated, Rupee-denominated financial results pertaining to the year that ended March 31, 2025. The financial statements of Tata Consultancy Services Limited and its subsidiaries (collectively referred to as TCS or the Company) are prepared in accordance with the Indian Accounting Standards (referred to as Ind AS) prescribed under section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, as amended from time to time. Significant accounting policies used in the preparation of the financial statements are disclosed in the notes to the consolidated financial statements.

The following table gives an overview of the consolidated financial results of the Company:

(Rs crore)

	FY 2025			FY 2024*
	Amount	% of Revenue	% Growth	Amount	% of Revenue
Revenue from operations	255,324	100.0	6.0	240,893	100.0
Earnings before interest and tax (EBIT) (Before other income)	62,165	24.3	4.8	59,311	24.6
Profit after tax attributable to shareholders of the Company	48,553	19.0	4.2	46,585	19.3
Earnings per share (in Rs)	134.19		5.1	127.74

* Excludes settlement of legal claim

Analysis of revenue growth and margin performance

On a reported basis, TCS revenue grew 6.0% in FY 2025, compared to 6.8% in the previous year. Despite increased macroeconomic uncertainty, the Company closed the year with a strong and resilient order book. During the year, clients prioritized initiatives around Technology modernization, Cost optimization, Vendor consolidation, Operating model transformation, Risk and Compliance. Ongoing delays and deferrals led to muted revenue growth in FY 2025.

EBIT margins were 24.3% in FY 2025, compared to 24.6%⁶ in the previous year. The 30-basis point decline was influenced by headwinds from merit-based interventions, including annual hikes, promotions, and investments in infrastructure and capability building. However, tailwinds such as improved utilization, productivity, and realization, along with favorable currency movements, contributed positively to the margins.

Average currency exchange rates during FY 2025 for the three major currencies are given below:

Currency	Weightage (%)	FY 2025 (Rs)	FY 2024 (Rs)	% Change YoY
USD	50.0	84.59	82.83	2.1
GBP	14.7	108.26	104.07	4.0
EUR	10.9	90.81	89.80	1.1

Movements in currency exchange rates through the year resulted in a positive impact of 1.8% on the reported revenue. The constant currency revenue growth for the year, which is the reported revenue growth stripped of the currency impact, was 4.2%.

Growth attributable to	FY 2025 (%)	FY 2024 (%)
Impact of exchange rate	1.8	3.4
Total Growth	6.0	6.8

 

Industry Vertical	Segment Revenue (^ crore)	YoY Revenue		Segment Margin (%)
	FY 2025	FY 2024	Growth %	FY 2025	FY 2024
Banking, Financial Services and Insurance	94,597	90,928	4.0	26.6	25.9
Communication, Media and Technology	45,893	39,391	16.5	20.9	27.7
Consumer Business	40,197	39,357	2.1	27.9	26.0
Life Sciences and Healthcare	26,456	26,745	(1.1)	28.2	28.5
Manufacturing	25,170	23,491	7.1	32.7	30.9
Others	23,011	20,981	9.7	25.2	22.3

Overview of Funds Invested

TCS investment strategy focuses on selecting a balanced mix of long-term and short-term instruments to seize market opportunities and achieve higher yields. By optimizing working capital, TCS enhances efficiency, resulting in improved overall returns.

(Rs crore)

	FY 2025	FY 2024
	Total funds invested
Investments in mutual funds, Government securities and others	30,956	31,730
Deposits with banks	12,831	12,259
Inter-corporate deposits	-	170
Cash and bank balances	3,435	2,804
Total	47,222	46,963

Business Outlook

Global growth is projected to be 2.8% in 2025 and 3.0% in 2026⁷, significantly below the 3.7% average growth rate seen from 2000 to 2019. While global economic activity faces headwinds from geopolitical and policy uncertainties, there are opportunities for resilience and recovery. Clearer trade agreements and improved global cooperation could help regain momentum. However, risks like financial market volatility, demographic shifts, and fiscal constraints persist. Proactive policy responses and innovation-driven growth can help mitigate these pressures.

In this challenging environment, enterprises are expected to go through longer decision cycles and experience increased scrutiny on discretionary spending. Staying close to changing customer needs is essential to understanding both direct and indirect impacts. Businesses must embrace continuous transformation to stay resilient and shifting market dynamics call for the ability to anticipate change, adapt rapidly, and turn potential disruptions into strategic advantages.

Key demand drivers expected to power the Companys growth in FY 2026 include:

• Technology Modernization and Transformation - Cloud migration and transformation, data estate modernization, efficiency and resilience through technology upgrades, modernizing legacy systems, ERP/ the digital core, scaling intelligent operations by leveraging IoT, computer vision, robotics to enhance efficiency, and establishing Data & Cybersecurity foundations and Centres of Excellence for evaluating AI & GenAI use cases.

• Business Transformation - Customer experience transformation using AI-driven commerce, hyper-personalization, omnichannel strategies, supply chain modernization, data analytics, and hyper-automation to drive business outcomes. Robust data foundations,

AI trust frameworks, and AI-enabled cybersecurity will strengthen resilience, while data-driven insights will power innovation across industries.

• Operating Model Transformation - Cost optimization, vendor consolidation, AI/GenAI led transformation of IT/business operations for greater resilience and leaner operating models, managed services models and real time operation visibility, risk and compliance initiatives.

• Tech-enabled Sustainability - Rising demand for tech-enabled sustainability solutions with emphasis on grid modernization, renewable energy integration, decarbonization, real-time insights driven maintenance & operations, and energy management.

Enterprise Risk Management

TCS understands the importance of effectively managing and mitigating risks to protect the Companys business and its clients and to add value for all its stakeholders. Based on the Risk Management Policy approved by the Board, the Company follows a comprehensive enterprise risk management framework (based on best practices from COSO 2017 and ISO 31000:2018) that encompasses risk identification, risk assessment, risk response planning and actions, risk monitoring and overall risk governance. TCS fosters a risk-aware culture, empowering leaders to take intelligent risks to maximize value. Regular risk reviews, assessments, and scenario planning help anticipate challenges and develop mitigation plans. Key risk indicators and control indicators are used to assess risks, provide early warnings, and consider effectiveness of the mitigation actions, respectively. TCS engages with all stakeholders, including customers, employees, suppliers, partners and regulatory authorities, to ensure transparent and collaborative risk management practices. The focus remains on driving sustainable growth, fostering innovation, delivering value to its clients, employees, and shareholders, being resilient and enhancing its reputation.

TCS takes a holistic view of its enterprise risk profile, covering strategic, operational, compliance, financial and catastrophic risks, thus enabling informed decision-making. Risks are assessed and managed at various levels with a top-down and bottom-up approach across the enterprise, business units, geographies, corporate functions, customer relationships and individual projects.

By proactively managing and mitigating these risks, TCS aims to ensure the long-term sustainability and success of the Company. TCS is confident that its robust risk management initiatives, coupled with its commitment to innovation and excellence, will enable the Company to navigate the challenges of the IT industry and global environment, and capitalize on the opportunities that lie ahead.

While the Company tracks various risks to the business, listed below are some of the key risks (R) and opportunities (O), anticipated impact on the Company⁸ and mitigation strategies.