Tata Consultancy's AI strategy has key-man risk

Wipro

09/10/2026 13:00

The author is a Reuters Breakingviews columnist.  The opinions expressed are her own.
By Ujjaini  Dutta
BENGALURU, Oct 9 (Reuters Breakingviews) - Few people know Tata Consultancy as well as N Chandrasekaran. He spent three decades at the $78 billion outsourcer, including eight years as CEO before becoming its chair and also taking charge of Tata Sons, the holding company of the wider Indian conglomerate. But with Chandra now at the centre of a power struggle at the salt-to-steel group, concerns over his bandwidth to steer the IT giant through AI disruption will surface.
     The company's latest quarterly earnings on Thursday underscore the problem. Revenue for the three months to the end of September grew to about 732 billion rupees ($7.6 billion), up just 2.8% in constant currency terms. Though its annualised AI services revenue jumped 19% to $3.1 billion from the preceding three months, it accounts for just 10% of the top line. Tata Consultancy's TCS.NS deal pipeline at $9.6 billion was down 4% year-on-year. The net margin contracted 60 basis points to 19%.
To shore up growth, Chandra has stepped up his direct involvement in recent months. That has coincided with a flurry of unusual deals. In August, Tata Consultancy acquired Porsche's P911_p.DE automotive and consulting unit. Last week, it took over US consumer electronics retailer Best Buy’s BBY.N global capability centre in India. The IT firm has also pivoted into capital-intensive investments by building data centres, with OpenAI as one of the customers.
For Chandra to be a hands-on chair while the company confronts the AI challenge makes sense. He knows the company well, and Tata Consultancy is the conglomerate's cash engine, accounting for 89% of Tata Sons' profit for the 2026 financial year. Problem is, he is also chair at at least seven other group companies including Tata Steel TISC.NS, Tata Motors TATM.NS, Tata Power TTPW.NS and Air India. With both the airline and the IT group in need of a big reset, Chandra already looked spread thin.
Now he's locked in an all-out war with Noel Tata, chair of Tata Trusts, which owns 66% of Tata Sons. Not only does that limit the time Chandra has to focus on the operating companies but it also raises a question mark over how long he'll be around to try. Tata Consultancy investors appear to favour him staying: shares fell when his position looked most threatened by the trusts and rebounded after Chandra dug in his heels.
Either way, it leaves K Krithivasan squarely with the job of seeing Tata Consultancy through the AI disruption and emerging from his predecessor's shadow. Since taking over as CEO in 2023, around the time the new tech cycle began disrupting IT services firms, Tata Consultancy's shares have lagged Infosys INFY.NS, HCLTech HCLT.NS and Wipro WIPR.NS. The shares rallied as much as 4% on Friday morning on faster AI revenue growth but that looks through a rather obvious key-man risk.
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CONTEXT NEWS
Tata Consultancy Services on October 8 reported revenue of 731.88 billion Indian rupees ($7.6 billion) in ⁠the quarter to the end of September 2026, up 11% year-on-year, or 2.8% in constant currency terms.

(Editing by Una Galani; Production by Aditya Srivastav)
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