Tata Consultancy Services reports a 14% fall in third-quarter profit, driven by substantial charges linked to India’s new labour codes, despite record AI revenue and resilient business performance.
Tata Consultancy Services reported a sharp fall in third-quarter profit after absorbing a large statutory charge from India’s new labour codes, a legal provision and employee separation costs, even as revenue and artificial intelligence-related business continued to expand. The company said net profit for the three months to December 31, 2025, fell 14% from a year earlier, while revenue rose 5% to ₹67,087 crore.
According to Business Standard and Moneycontrol, the biggest hit came from a ₹2,128 crore impact linked to the labour code changes, which altered wage definitions and pushed up expenses such as gratuity and long-term leave obligations. TCS also booked a ₹1,010 crore provision for a legal claim and ₹253 crore in termination-related costs. The company laid off about 1,800 employees during the quarter and told analysts the reduction in workforce would continue into the current quarter, Reuters-style reporting from the earnings call indicated.
Despite the profit pressure, the company’s operating performance remained resilient. Fintech Biz News reported that annualised AI services revenue reached $1.8 billion, up 17.3% quarter on quarter in constant currency, while operating margin held at 25.2% and net margin improved to 20.0%. Yahoo Finance also noted that cash generation remained strong, underscoring the business’s ability to absorb one-off charges while still posting steady underlying performance.
Chief executive K. Krithivasan said the company’s growth momentum from the previous quarter had continued and reiterated TCS’s aim of becoming the world’s largest AI-led technology services company. Executive director and chief operating officer Aarthi Subramanian said clients were accelerating investment in cloud, data, cyber security and enterprise transformation, while chief financial officer Samir Seksaria pointed to disciplined execution and financial resilience. The board declared a dividend of ₹57 a share, including a special dividend of ₹46, with a record date of January 17, 2026, and payment due on February 3, 2026.
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