Tata Consultancy Services (TCS) projects stronger performance in the second quarter as macroeconomic pressures ease and its artificial intelligence deal pipeline grows. Concurrently, venture firm B Capital notes a stabilizing IPO market in India, supported by deeper market liquidity and increasing investor comfort.
- TCS forecasts Q2 recovery with strong AI deal flow
- AI revenue at $2.6 billion from pure AI transformation projects
- B Capital sees deeper, more stable venture-backed IPO valuations
What happened
Tata Consultancy Services reported flat sequential growth and a 13.9% year-on-year revenue increase in rupee terms for Q1. The company’s CEO K Krithivasan and COO Aarthi Subramanian indicated that ongoing macroeconomic challenges, including the continued West Asia crisis, have affected certain sectors negatively. Despite these pressures, manufacturing and life sciences sectors are expected to improve in the upcoming quarters.
TCS revealed that its AI revenue has reached $2.6 billion, reflecting projects focused solely on AI transformation. According to Subramanian, enterprises moved from pilot stages in 2024 and 2025 to meaningful scaling of AI initiatives last year, and this momentum continues. On the equity market side, B Capital’s leaders Howard Morgan and Karan Mohla shared that the pricing of venture-backed IPOs in India has stabilized, aided by more active domestic mutual fund support and a gradually returning base of foreign institutional investors.
Why it matters
TCS’s expectations of easing pressures on stressed sectors and its expanding AI portfolio signal a potentially significant growth phase for India’s largest IT services provider. The company’s careful approach to talent acquisition aligned with evolving customer demands highlights how leading IT firms are strategically positioning themselves amid global economic uncertainties.
The stabilization of India’s IPO market for tech and venture-backed companies reflects a maturing investment landscape, encouraging more startups to consider public listings. This shift supports greater liquidity and valuation transparency in a market that had previously experienced volatility and pricing instability, thus fostering confidence among investors and entrepreneurs alike.
What to watch next
TCS’s ability to capitalize on AI transformation deals will be a key factor to monitor in the coming quarters, particularly how its pipeline converts into sustained revenue growth amid fluctuating global economic conditions. Additionally, sectors like manufacturing and life sciences will serve as important indicators for the company’s broader recovery prospects.
In India’s capital markets, the trajectory of venture-backed IPO pricing will be essential to watch, especially with the anticipated return of foreign institutional investors in the latter half of the year. This could lead to greater pricing flexibility and increased volume of tech listings, ultimately shaping the future of public market access for emerging Indian startups.