Tata Consultancy Services (TCS), India’s largest IT services firm, reported a modest 6% rise in net profit to Rs 12,760 crore in Q1 FY26, but a closer look at the numbers has triggered concern among tech professionals and market watchers. One Redditor’s analysis, now going viral on X (formerly Twitter), suggests that Indian IT’s decade-long golden run might be reaching a turning point.
While TCS profits grew year-on-year, revenue growth was just 1.3% and actually declined in constant currency terms. More notably, total deal wins dropped sharply from $12.2 billion in the previous quarter to $9.4 billion this time.
“Attrition is falling, but that may just be because hiring is slowing,” the Reddit post noted, adding that these trends hint at a broader slowdown in client demand, especially from the US and Europe. TCS’s own management cited “demand contraction” in key global markets.
A key concern flagged is the growing impact of generative AI and automation. Traditional outsourced services, including manual testing, support, and low-end coding, are increasingly being replaced by AI-native solutions. The Redditor warned that Indian IT companies must evolve quickly or risk obsolescence.
“TCS is investing in GenAI, but it’s unclear if the broader Indian IT sector is ready for this pivot. Clients now want real AI outcomes, not just ‘digital transformation’ slogans,” the post said.
Indian IT stocks, once seen as safe bets due to their high margins and predictable earnings, may now face revaluation. TCS shares dropped over 2% following the earnings report, despite the announcement of an Rs 11 interim dividend and Rs 4,000 crore payout to shareholders.
“Valuations were priced for perfection. If revenue growth keeps slowing, that premium may no longer be justified,” the Redditor noted.
TCS has denied any immediate plans for layoffs, stating that AI won’t eliminate jobs. However, with clients tightening budgets, delaying project ramp-ups, and reducing deal sizes, headcount-heavy models may come under pressure.
Despite the bleak signals, the Redditor does not believe Indian IT is collapsing, only that it is transforming.
“The next decade won’t look like the last. Those who pivot to AI, develop deep domain expertise, and automate delivery models will thrive. Others might fade,” the post concluded.
The user also advised tech professionals to consider upskilling in AI/ML, data roles, or exploring product-based firms more deeply engaged in innovation cycles.
