Samir Seksaria, chief financial officer at Tata Consultancy Services, believes that artificial intelligence (AI) will eventually impact deal structure.
"This shift is starting to take shape. Traditionally, information technology services contracts were largely effort-based. However, as AI increasingly replaces or augments human effort, that model cannot remain unchanged," Seksaria told Business Standard.
He is of the opinion that over time, contracts will move more towards outcome-based structures.
"That creates a win-win situation -- pricing is linked to actual business outcomes rather than just the number of people deployed or hours billed. That said, this transition will be gradual. It will not happen overnight, but it is clearly the direction in which deal structures will evolve," he added.
TCS, for the first time, disclosed revenue from AI. The annualised AI revenue grew 17.3 per cent sequentially to $1.8 billion.
The early impact of AI has been on productivity and those gains are also evident in the revenue per employee. Seksaria said that in the third quarter of 2025-26 (Q3FY26), revenue per employee went up by 3.5 per cent over the previous quarter (Q-o-Q).
"If you examine the data over the last eight quarters, it has not remained on the same trajectory -- it has moved meaningfully. On a sequential basis, it has increased by about 3.5 per cent. There are multiple factors at play here. Part of it is driven by higher productivity gains, which we have already highlighted, and part of it is also influenced by pricing and mix. So, it is not a single-variable outcome," he added.
Asked if TCS will manage to be in its range of 26 TO 28 per cent on margins, Seksaria said that aspirations remain so. "If you look at our trajectory since the exit of last year, margins have improved by about 100 basis points (bps). Despite the typical seasonality in Q3, we have been able to maintain those levels. Going forward, we remain focused on disciplined profitability while continuing to make the necessary investments we have spoken about," he added.
Seksaria also reiterated that the company will continue to invest, factoring those costs into its margin profile. "We continue to anchor ourselves to our aspirational margin band of 26-28 per cent, and are focused on inching towards the lower end of that range, starting with 26 per cent. Given the various moving parts, it is difficult to commit to a specific timeline,' he added. -- Shivani Shinde, Business Standard
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