India’s IT bellwether Tata Consultancy Services (TCS) reported 13.91% decline in its Q3FY26 net profit at Rs 10,657 crore. The earning was hit by one-time impact of the implementation of new labour codes and restructuring expenses.
Here are the top takeaways from its Q3 earnings performance-
1. Impact of new labour code
The IT firm reported a one-time statutory impact of Rs 2,128 crore as a result of the new labour code. The impact primarily stemmed from changes in the definition of wages under the new framework, leading to higher provisions for gratuity amounting to Rs 1,816 crore and long-term compensated absences of Rs 312 crore.
The company added that but for these one-time impact, its profit would have grown 8.5% to Rs 13,438 crore.
2. TCS headcount falls by over 11,000
The overall headcount was down by 11,151 in Q3FY26 to 5,82,163 employees. TCS had indicated plans to lay off around 2% of its workforce earlier in 2025 as part of a restructuring exercise. It reported a reduction of 19,755 in the overall staff in September quarter, but hinted that only 6,000 of these were involuntary actions because of the restructuring exercise.
3. Rs 57 per share dividend announcded
The company board has also announced a dividend of Rs 57 per share, including a special dividend of Rs 46. The company has fixed January 17 as the record date to determine eligible shareholders, while the dividend will be paid on February 3. This marks the company’s third interim dividend of this fiscal year.
4. AI services revenue hits $1.8 billion
Annualised AI services revenue reached $1.8 billion, registering 17.3% QoQ growth in constant currency.
Sudeep Kunnumal, Chief HR Officer, said “As of this quarter, there are over 217,000 associates with advanced AI skills. We doubled our intake of fresh graduates with higher order skills, rapidly expanding our next-generation talent pool.”
5. Q3FY26 revenue rises 4.86%
The company’s revenue from operations increased 4.86% YoY to Rs 67,087 crore from Rs 63,973 crore reported in Q3FY25.
The operating profit margin during the quarter was stable at 25.2% when compared with September quarter(Q2FY26) but higher than 24.5% in the year-ago period (Q3FY25), the company statement said.
Its chief executive and managing director K Krithivasan said the growth momentum witnessed in September quarter continued into the next three months as well. “The growth momentum we witnessed in Q2FY26 continued in Q3FY26. We remain steadfast in our ambition to become the world’s largest AI-led technology services company, guided by a comprehensive five-pillar strategy. Our AI services now generate $1.8 billion in annualized revenue,” he said.
The company’s overall new deal wins stood at $9.3 billion.
Contributions from India to the topline declined by over 34% on-year, leading to the domestic contribution to the overall pie dipping to 6.1% from 9.8% in Q3FY25.
Amid the geopolitical changes, TCS reported North America revenue rising 1.3% YoY and revenue from the UK declining 3.2% in constant currency terms.