Thank you, Milind. Starting with the demand drivers for Q3, we observed that customer priorities continue to remain centered around cost optimization, business transformation. GenAI and AI and Cloud Services continued to see significant growth for us this quarter. Clients are investing in Agentic AI adoption, building robust data foundation and taking a value chain based approach to AI and GenAI transformation.
Agentic AI represents the next step of maturity the exponentially evolving space of AI. It allows us to orchestrate actual transactions inside business value chains using the rapidly improving planning and reasoning capabilities of large language models.
We are now starting to go past the initial way of chatbots and RAG deployments of GenAI. And more crucially, this will allow TCS to use our deep contextual knowledge of our customers' business to design, train and deploy agents that solve high-value business problems.
As an example, a leading American electronics retailer partnered with TCS to enhance customer engagement and drive operational excellence. TCS utilized contextual knowledge, design and implement a scalable unified contact center platform that consolidates chat and IVR system, enabling seamless workflows across channels.
The platform employs advanced natural language understanding and conversational agents for intent identification and handling of open-ended inquiries. The real-time dashboard tracks critical metrics including user containment rate, queue transfers and system utilization, providing actionable insights for continuous optimization, supporting over 30% daily chat conversation and 3x as many invoice. The system has achieved 90% intent identification, 3% user containment improvement rate and enabled [ context server ] brand-aligned response, improved self-service and reduced live agent transfers.
One of the leading global life sciences major partnered with TCS for accelerated cancer drug discovery. The challenge was to design small molecules against a novel target protein of interest where no target-specific small module dataset is available. The only available input is a target protein structure.
The novel molecules must satisfy all drug-like properties. We designed the GenAI-based drug discovery solution for identifying small molecules on a cancer target that takes the structure of the target protein as input and designs target-specific property optimized small molecules.
We generated around 1,300 molecules, optimized for 5 properties and further reduced it, had to pass several proprietary filters on client sites and assessed on synthesizablty, against client signals compound library. These 12 molecules have been shortlisted and are in-vitro assessment.
Technology modernization, [ sharp ] S4 HANA transformations, cloud engagements, building data foundations for AI and cybersecurity continue to be priority areas that are seeing strong investments from our clients. We expect client IT budgets remain similar in CY '25, with a positive bias. We are seeing early signs of revival in discretionary spend in BFSI and Retail. Manufacturing, Life Sciences & Healthcare should also start seeing growth in the medium term, as near-term challenges have bottomed out in this quarter.
Let me now give some specific color on our performance during the quarter and outlook for our key verticals in Q3. For BFSI, the new year promises cautious optimism with easing inflation, falling unemployment numbers and stable government. Headwinds will continue because of unresolved geopolitical issues, trade wars and uneven growth profile.
Customers are focused on operational efficiency and modernize IT with an eye on future growth. The BFSI industry is a leading adopter of AI, GenAI and other cutting-edge technologies. We saw a significant increase in successful production deployment of AI, GenAI engagements, leading to greater business certainty and confidence for our clients.
As an example, one of the leading global banks partnered with us to build the first of its kind AI-led real-time for fraud detection solution, replacing its existing technology, thereby reducing fraud-related losses and improving the financial well-being of customers. Our innovative predictive AI solution performs real-time transaction monitoring, detect customer behavior anomalies and generate risk scores.
This solution delivered an 18 percentage point improvement in fraud detection, reduced false positives by 25% and improved fraud analysis response time by 50%. The consumer business will return to growth on a sequential basis, and it was primarily driven by the improvement seen in retail in all major markets. We are helping our customers navigate changing customer expectations, embrace digital transformation and prioritize technology modernization and sustainability solutions in an uncertain macroeconomic environment.
TCS performed well in U.K., EMEA and APAC markets, however, slowed considerably in the U.S. due to market-specific issues and strained profitability of our customers. The leading American multinational luxury fashion retailer, looking to expand within the EU chose TCS as a strategic partner to enable faster market entry.
We leveraged our contextual knowledge and deep understanding of the omnichannel ecosystem to adapt it for local languages, currency payment preferences and complaint regulations, ensuring a unified user experience across all geographies and channels. We implemented a leading order management system and integrated various third-party services, including various management systems and multiple payment gateways. This scalable solution streamlined brand onboarding, reducing cycle time by 30% and enabled quick access to new markets. So the localized experiences helped the brands to connect more effectively with European consumers driving sales and fostering loyalty.
Client's IT budgets in the technology, software and services industries continue to remain flat. TCS saw continued growth momentum despite the seasonal weakness in Q3. We're really proud of a differentiated value proposition to leading technology players.
As an example, a leading global semiconductor major has partnered with TCS to cocreate foundational AI technology that includes multi-core server CPU, GPUs, SoCs and AI-based systems. We are also helping our clients build LLMs, benchmark their performance and enhance their efforts and quantization.
In Life Sciences & Healthcare, the client-specific challenges called out by us last quarter are largely stabilized. The med-tech industry is undergoing rapid transformation, driven by shift to intelligent devices and predictive AI, GenAI and genomics, cell therapy and personalization. Customers are also investing significantly in scaling the digital manufacturing capabilities and building resilient supply chain. TCS is well positioned to capitalize on opportunities in this segment with a unique proposition across the value chain. A global medical technology company has partnered with TCS to digitize device history records, transform plant operations using cutting-edge platform and reimaging customer experience, next-gen e-commerce.
In Q3, we continue to see softness in manufacturing due to a combination of macro and industry-specific issues in auto and aerospace. However, we saw a good number of large deal wins during the quarter, and we see a strong pipeline for the future. We continue to capture demand on the back of significant investments in the areas of factory of the future smart manufacturing, software-defined vehicles, AI, and GenAI. The CMI industry continues to encounter challenges with demand primarily led by technology-driven cost optimization. However, there are encouraging signs of a rebound in IT spending as telcos advance their efforts to expand into adjacent businesses, while enhancing efficiency in their core operations.
Customers now have a heightened expectation of ROI, leading to a major transformation initiatives being divided into small and manageable components. We continue to see excellent traction in growth markets. Clients and growth markets are focused on digital transformation, including cloud migration, cloud-native applications, application modernization, advanced data analytics, ERP transformation, infrastructure consolidation.
TCS has an outstanding track record of executing nation building and transformative projects across these markets. This combined with the strategic investments we have made in the talent, global delivery centers, [ spaceports ] and partnerships gives us a unique opportunity for long-term sustainable growth.
To conclude, amidst an environment of uncertainty and seasonal softness, we delivered flat growth in Q3 with margin expansion of 40 basis points. With reduction in the interest rates, easing of inflation and reduced uncertainty with the new U.S. administration taking over, we expect the discretionary demand to strengthen.
Thank you, and we can now open the line for questions. Over to you, Nehal.
