India’s leading IT services firms, Tata Consultancy Services (TCS) and HCL Technologies, kicked off the Q3 FY26 earnings season on Monday, January 12, with a set of results that analysts described as “mixed.” While both companies beat revenue estimates and showed massive acceleration in Artificial Intelligence (AI) projects, their bottom lines were hit by a one-time regulatory cost.
Performance Snapshot: Q3 FY26
The following table summarizes the key financial metrics for the quarter ended December 31, 2025:
| Metric | TCS (Tata Consultancy Services) | HCL Technologies |
| Revenue | ₹67,087 Crore (+5% YoY) | ₹33,872 Crore (+13.3% YoY) |
| Net Profit (PAT) | ₹10,657 Crore (-14% YoY) | ₹4,076 Crore (-11% YoY) |
| Operating Margin | 25.2% (Stable) | 18.6% (Improved) |
| Deal Wins (TCV) | $9.3 Billion | $3.0 Billion |
| AI Revenue (Annualized) | $1.8 Billion | $146 Million (Quarterly) |
| Dividend Declared | ₹57 per share | ₹12 per share |
Why did Profits Decline?
The sharp drop in net profit for both giants was not due to poor business performance, but rather a one-time exceptional charge.
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New Labour Codes: Both firms made significant provisions to comply with updated government labor laws that mandate basic pay be at least 50% of total compensation.
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TCS Impact: Absorbed a charge of roughly ₹2,128 crore for labor codes and a ₹1,010 crore legal claim provision.
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HCL Tech Impact: Incurred a one-time provision of ₹956 crore.
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Adjusted Growth: Excluding these one-time hits, TCS’s profit actually grew by 8.5% YoY, while HCL Tech’s adjusted profit rose by 4.4% YoY.
Key Takeaways and Outlook
1. The AI Revolution is Here
Both companies highlighted AI as their primary growth engine. TCS now has over 217,000 employees trained in advanced AI, while HCL Tech raised its services revenue guidance to 4.75%–5.25%, citing strong demand for “Agentic AI” and “Physical AI” (Robotics).
2. Contrasting Growth Trends
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HCL Tech emerged as the “growth leader” this quarter, with its sequential constant currency (CC) revenue growing at 4.2%, significantly beating the industry average.
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TCS showed more conservative growth (0.8% CC QoQ), as its massive exposure to North American banking (BFSI) and the UK market saw some seasonal weakness.
3. Headcount and Attrition
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TCS saw its headcount decline by 11,151, ending the quarter with 582,163 employees—a sign of increased automation and productivity.
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Attrition remained stable or improved for both, with HCL Tech reporting a healthy drop to 12.4%.
Share Market Reaction
Following the news, both stocks saw volatile trading on Tuesday and Wednesday. While the one-time costs initially spooked investors, the strong dividend payouts (especially TCS’s ₹46 special dividend) and robust AI deal pipelines helped the stocks recover most of their early losses.
Would you like me to generate an image summarizing these results, or should I compare these figures with the performance of Wipro and Infosys once they report?