HCL Tech vs TCS: How did major IT services firms fare in Q3 FY26 on key parameters? The fine print

Shares of TCS and HCL Technologies are trading mixed at 11:30 am on Monday after announcing their Q3FY26 results on Monday. The two companies have set the tone for the overall industry’s earnings expectations with steady topline growth and operating margins for the quarter. Despite the sectoral headwind of visa restrictions and the seasonality factor, the IT sector earnings are set for a steady start for the Q3 earnings season. Here’s how the HCL Tech and TCS performed in Q3FY26

Deal wins and topline

In terms of the topline growth, HCL Technologies has surpassed the sectoral behemoth TCS by growing 6% sequentially and 13.3% YoY for the quarter at ₹33,872 crore. Similarly, the constant currency revenue growth also went up 4.2% QoQ and 4.8% YoY. While TCS reported a 4.8% YoY and 2% QoQ jump in revenue at ₹67,087 crore, and flattish growth in constant currency terms. The steady growth in the top-line can largely be attributed to muted growth in the BFSI segment, which contributes more than 31% of the total revenue.

In terms of deal wins, too, HCL Technologies reported strong gains, up 17% QoQ and 43.5% YoY at $3 billion, while TCS recorded a total deal win of $9.3 billion for the Q3FY26. AI services remain the key anchor for deal wins, with both companies expanding their AI services base across segments.

AI scalability

Artificial intelligence has been a key transition moment even for the IT industry, as the majority of the projects now leverage AI into product offerings. In terms of AI-related services revenue, TCS continues to remain the sectoral leader with annualised revenue of $1.8 billion. The company intends to become the world’s largest AI-led technology company. Since 2023, more than 5000 projects in AI have a 95% satisfaction rate and 54 of the 60 clients with over $100 million contract value engaged in AI work with TCS; 85% of $20 million clients use TCS for AI.

While HCL Technologies 3% of the revenue, over $100 million, came from Advanced AI revenue. The management also said, nearly all the deal wins include AI and AI offerings were instrumental in multiplying strategic wins. In terms of revenue, HCL Technologies posted 16% qoq growth in advanced AI revenue.

Operational metrics and profitability

In terms of operational metrics, TCS reported an operating profit of ₹16,889 crore, up by 2% QoQ at ₹16,565 crore in the previous quarter. Similarly, the operating margin stood at 25.2%, largely unchanged sequentially and up 500 bps over the previous year's same quarter.

On the other hand, HCL Technologies reported a 13.2% sequential jump in the EBIT at ₹6,285 crore and an EBIT margin of 18.6%, which includes the impact of restructuring cost.

On the bottom line front, both companies incurred one-time exceptional provisional expenses on account of the implementation of new labour codes. Hence, HCL technologies reported a 11.2% decline in net profit at ₹4,076 crore, and TCS reported a 13.9% drop in net profit at ₹10,567 crore. After adjusting for the exceptional item, HCL Technologies and TCS reported a 4.5% & 8.5% YoY growth in the bottom line for the quarter.

Guidance

Lastly, in terms of guidance, HCL Technologies has improved its revenue guidance in constant currency terms for FY26 from 3.5% to 4.5% in at the higher end. The services revenue growth is expected to be between 4.75% to 5.25% with an EBIT margin of 17% 18%. TCS does not provide any separate guidance or advance estimates; the company aims to become the largest AI-led technology service company, and throws enough light on its future-focused area.