After a bleak quarter for TCS, and a moderately AI-led quarter for HCLTech, all eyes were on Tech Mahindra for Q1 FY26. And it indeed met that expectation, much in line with FY25 earnings. 

Tech Mahindra has opened the new fiscal with a 33.95% jump in net profit, touching ₹1,140.6 crore in Q1 FY26—just shy of last quarter’s ₹1,167 crore, but well ahead of analyst expectations.

While revenue growth remained under pressure at ₹13,351 crores, up 2.7% YoY—as expected—the company’s focus on cost discipline and large deals helped offset the drag. Revenue declined sequentially, in line with the anticipated 0.8% drop in constant currency terms. 

However, strong margin expansion and robust deal momentum kept the narrative optimistic. “We have delivered seven consecutive quarters of margin expansion, a clear reflection of the discipline and focus across our organisation,” said Rohit Anand, CFO, highlighting the success of Project Fortius in driving operational efficiencies even in an uncertain environment. 

The project is envisioned to improve its operating margin to 15% by the end of fiscal year 2027. 

The company bagged new deal wins worth $809 million this quarter, marking a recovery from the previous quarter’s $798 million and exceeding analyst expectations of $700–750 million. Total deal wins over the last twelve months are up by a solid 44%.

The AI Roadmap Remains Strong

As Tech Mahindra deepens its generative AI strategy, CEO Mohit Joshi has highlighted that the company is actively building industrial-grade AI agents while laying the groundwork for a future where IT services are reimagined with automation at their core. 

Joshi said the company has already deployed over 200 industrial-grade enterprise AI agents, marking a significant milestone in their effort to create scalable, agentic AI systems. He claims that the agentic AI solutions also introduce a hybrid model that combines human and AI agents to deliver enhanced productivity and business outcomes.

The firm’s employee attrition rate rose to 12.6% in Q1FY26 from 11.8% in Q4FY25. The headcount increased to 148,517.

The company said it is well-positioned to enable clients on this journey, thanks to a “more experienced and capable talent bench,” which now includes leaders like Amol Phadke, the new chief transformation officer, who brings experience in AI, cloud, and software from companies like Google and Telenor.

Internally, 77,000 employees have been trained in AI and GenAI, with a substantial number having undergone advanced training and certifications. 

According to Joshi, Tech Mahindra’s AI roadmap is not limited to just building tools or deploying agents. “Another part also is looking at how the entire IT services business will get reinvented in the future through a combination of agents and a combination of a human workforce,” he said.

In line with this, Tech Mahindra also partnered with Agentic AI startup KogoAI in May to jointly develop and deliver next-generation enterprise AI solutions focused on autonomy, scalability, and regulatory compliance.

The partnership combines Tech Mahindra’s enterprise transformation capabilities with KOGO AI’s Agentic AI infrastructure, enabling organisations worldwide to implement Private AI frameworks tailored to their unique operational and regulatory requirements.

AI Delivered Right

This AI-first approach extends beyond traditional IT services and is also shaping Tech Mahindra’s BPS operations. Joshi emphasised that the company’s investments in ecosystem partnerships, announced during the quarter, will help scale these capabilities faster.

While the macroeconomic picture remains mixed across sectors and geographies—with volatility in high-tech and continued stabilisation in telecom and BFSI—Tech Mahindra is betting on disciplined execution and long-term AI-led transformation to drive sustained performance.

“We are pretty confident that we’re moving in the right direction and we’ll continue to drive those levers as we move forward,” Joshi said, referring to the broader strategy that combines AI interventions, cost optimisation, and operational discipline under the company’s ongoing Project Fortius program.

Joshi explained that the company’s AI strategy is built around the idea of “AI delivered right,” a principle rooted in execution, not hype, which was started last quarter.

“Our own survey showed that 74% of clients said they were unable to move their AI experiments—proofs of concept—into production,” Joshi said, highlighting a significant gap between what works in demos and what can scale in a live business environment.

He sees this not as a limitation, but a massive opportunity for Tech Mahindra. 

“This is a very real challenge,” he said, adding that most enterprises are struggling to operationalise AI because their technology landscape is too fragmented, their data infrastructure is underdeveloped, or the use cases aren’t grounded in business context.

The goal, he added, is to help clients simplify and modernise their systems, build the right data strategies, and use AI not just to reduce costs but also to unlock new revenue streams.

In Q4 FY25, Tech Mahindra delivered a strong bottom-line performance with a 77% year-on-year surge in net profit, reaching ₹1,167 crore. However, revenue increased by only 3.98% year-on-year, reaching ₹13,384 crore due to delays in contract renewals, particularly from a key high-tech client. 

The post Tech Mahindra Beats TCS, HCLTech Blues with 34% Profit Surge in Q1 FY26 appeared first on Analytics India Magazine.