TCS vs HCL Tech: How two IT giants stack up in the AI race after Q2 results

HCL Tech's revenue from operations rose 11.52 per cent YoY to Rs 35,620 crore in Q2 FY27, outpacing TCS' 11.22 per cent growth to Rs 73,188 crore.

Its margin also expanded at a faster rate of 131 basis points sequentially (to 18.2 per cent) against flattish margin for TCS sequentially at 24 per cent, aided by AI-led efficiencies and a richer Advanced AI mix.

Analysts noted that HCL Tech's advanced AI revenue were up 28.4 per cent QoQ at $219 million in constant currency (CC) terms, forming 6 per cent of its of revenue and 50 per cent of incremental revenue, making it HCL Tech's key growth engine. For TCS, annualised AI revenue stood at $3.1 billion, up 19 per cent QoQ but accounted for 10 per cent of its total revenue.

"Advanced AI revenue for HCL Tech stood at $219 million. This may seem particularly strong but in relation to the overall revenue it was 5.9 per cent compared to 10 per cent in TCS. That said, we do not think they may be exactly comparable. Of the incremental revenue of $100 million QoQ, half of it came from the Advanced AI services," BOB Capital Markets said.

The domestic brokerage said it fears that HCL Tech would not hesitate to drop margins to seek better growth than the peer, especially with TCS deciding to get aggressive.

Among large peers reporting results so far, HCL Tech also recorded the strongest bookings momentum, with its net new bookings reaching $3.3 billion, up 35.4 per cent QoQ.

"TCS reported Q2FY27 TCV of $9.6 billion, up approximately 1.1 per cent QoQ, while Accenture’s managed-services bookings were $12.8 billion, up 2.7 per cent QoQ. HCL Tech’s sharp sequential rebound and double-digit YoY growth point to improving deal momentum and support forward revenue visibility," Systematix said.

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Analysts noted that TCS management indicated that AI demand is increasingly moving beyond experimentation towards AI-led technology modernization, enterprise transformation, and agentic AI, with strong traction in agent control planes. "Clients are also evaluating LLMs, SLMs, and open-weight models based on their requirements, while TCS sees an opportunity in managing the associated governance and token costs," Nirmal Bang Institutional Equities said.

In the case of HCL Tech, the management said HCL Tech is gaining market share in AI services but acknowledged that the industry is in the early phase of an AI-led deflation.

HCL Tech said the two largest Advanced AI deals won in Q2 were single-sourced, driven primarily by its partner relationships, and that many large deals now carry a specific line item for the AI Force platform. HCLTech and Anthropic announced a global premier partnership to accelerate enterprise adoption of agentic AI with a focus on safety, cybersecurity, and governance, and HCL Tech will
establish a dedicated Anthropic business unit and centre of excellence to accelerate deployments of Claude in enterprise environments.

"HCLT also achieved OpenAI Advanced Partner status and joined its cyber defence initiative; jointly developed AI Factory deployment and validation capabilities with NVIDIA; announced a family of Gemini Enterprise offerings and a joint transformation programme with Google Cloud; scaled enterprise AI with ServiceNow; and signed a partnership with Cohere focused on Canada and Germany," ICICI Securities said.

Nirmal Bang said AI-led productivity gains and deflation may increasingly offset incremental AI-led spend, with large cap players potentially facing greater impact given their large legacy services base.