TCS’s AI business reaches $2.6 billion run rate as enterprises ramp up transformation spending

Artificial intelligence is rapidly emerging as one of the biggest growth engines for Tata Consultancy Services (TCS), with the company’s AI services business reaching an annualised revenue run rate of $2.6 billion in the first quarter of FY27, reflecting surging enterprise demand for AI led transformation across industries.

The country’s largest IT services company said AI revenue grew 13.6% sequentially during the quarter, while clients continued to increase spending on AI, cloud modernisation, cybersecurity and digital transformation despite geopolitical and macroeconomic uncertainty.

“Our AI services revenue continues to accelerate. At the end of Q1 FY27, it stands at $2.6 billion in annualized revenue, which is up 13.6% QoQ,” TCS Chief Executive Officer and Managing Director K Krithivasan said during the company’s earnings call.

The strong AI momentum also helped TCS secure a healthy order book. The company reported total contract value (TCV) of $9.5 billion during the quarter, including several AI led business transformation engagements. These included an $800 million mega deal with SKF, a strategic partnership with ServiceNow and another multi million dollar deal with a Europe based Fortune Global 50 company.

According to Krithivasan, enterprises are no longer experimenting with artificial intelligence but are making it central to their technology strategy.

“Client priorities are increasingly aligned with our focus areas of AI led transformation, modernization, cybersecurity, sovereign cloud, platform rationalization, and vendor consolidation,” he said.

To strengthen its AI capabilities, TCS announced a series of strategic partnerships and product launches aimed at expanding its presence across the enterprise AI value chain.

The company entered into a global premier partnership with Anthropic, giving TCS early access to the Claude family of AI models, 50,000 licences for its workforce, joint go to market programmes and co development of industry specific AI solutions. TCS iON will also become a training and certification partner for Anthropic technologies.

In another significant move, TCS became the first global systems integration partner for Mistral AI. The partnership will focus on building sovereign and customised AI models for enterprises while establishing a dedicated centre of excellence to develop AI solutions for banking, healthcare, manufacturing and the public sector.

The company also launched TCS SovereignSecure Cloud for Europe, targeting governments and regulated enterprises that require AI ready cloud infrastructure with stronger compliance, data residency and operational control as geopolitical risks reshape enterprise technology investments.

Krithivasan said these initiatives are part of TCS’s broader Infrastructure to Intelligence strategy, under which the company is building partnerships with frontier AI companies while creating proprietary AI capabilities for enterprise customers.

The company also announced a dedicated Global Value and Innovation Center business unit that will help enterprises establish, operate, transform and divest global capability centres (GCCs), an area where AI is increasingly being embedded into business operations.

Another platform, HyperVault, also played an important role in the quarter.

“HyperVault is strengthening TCS’s market positioning and deepening 360 degree partnership with clients and ecosystem partners. In Q1 FY27, these partnerships enabled two very large IT services deals which were net new for us,” Krithivasan said.

The announcements indicate that TCS is positioning itself not merely as an IT services provider but as an end to end AI transformation partner, offering enterprises everything from frontier AI models and sovereign cloud infrastructure to industry specific AI applications, cybersecurity and managed transformation services. As global companies move from AI pilots to enterprise wide deployments, TCS is betting that artificial intelligence will become one of its most significant long term growth drivers.