“Currently, most AI engagements are focused on delivering quick outcomes, which is why fixed-price and managed services models are more prevalent than effort-based pricing. Over time, this is expected to gradually shift towards outcome-based models. However, that transition is not yet significant and will play out over the longer term,” he told Business Standard.
Though slow, AI revenues have finally started to make impact as enterprise clients move from pilot to execution.
Recently, there have been discussions on how to price AI deals, especially as humans and agents start to work together.
TCS announced in the fourth quarter of FY26 that its annualised AI revenue was $2.3 billion in Q4. This is up from $1.8 billion in Q3.
Seksaria said that as the industry and the company in particular see more AI deals, the shift in pricing will be imminent.
“Overall, the industry — over the years — has evolved from staff augmentation or time and material (T&M) pricing-based to managed services, fixed price and outcome based. Gradually, as things move from just effort-based to more outcomes, the pricing structure also has to evolve and that would be a gradual one,” he added.
TCS, on April 9, announced its fourth quarter results and reported margins of 25.3 per cent, a 10 basis points (bps) expansion. For the full year, the company’s margins were 25 per cent, up 70 bps, marking a four-year high.
When asked if TCS’ aspirational band of margins at 26-28 per cent is achievable in the current environment, Seksaria said: “Our priority will be to make the right investments to support growth. Over the long term, we continue to believe that the 26–28 per cent margin range is achievable for TCS. At the same time, we will aim to move closer to the lower end of that band in the near term while continuing to invest for growth.”
Add to this the company’s recent focus on merger and acquisitions (M&As). Recently, TCS announced the acquisition of Coastal Cloud for $700 million, one of its largest inorganic bets.
TCS Chief executive officer (CEO) and managing director (MD) K Krithivasan had hinted that the company is looking for more strategic M&As in the future.
The fourth quarter was also one of the quarters of high rupee volatility. TCS saw gain of 110 bps from currency. But the company has chosen to reinvest it into business.
Despite a volatile currency, Seksaria said the company will continue with its hedging policy. That is, hedging for two quarters forwards — covering both revenue and receivables.
“Hedging two quarters forward gives us time to realign to any new normal or volatility over a six-month period. Within the quarter, we may take tactical calls based on movements in the underlying positions. However, we do not take forward bets on currency movements. That consistency remains, and we do not see it changing,” he added.
 "Samir Seksaria, chief financial officer (CFO), Tata Consultancy Services (TCS)")