Representative image of the TCS logo.
Credit: PTI file photo
IT bellwether Tata Consultancy Services kicked off the second quarter earnings season by beating expectations with a 7.9% year-on-year growth as it reported total revenue of Rs 59, 692 crore for the quarter ended September, 2023.
Additionally, the IT conglomerate’s board approved a share buyback worth up to Rs 17,000 crore at Rs 4,150 apiece and a dividend payout of Rs 9 per share.
“Strong deal momentum delivered us a very large order book in Q2 – our second highest total contract value ever in a quarter, and good pipeline,” said company Chief Executive and Managing Director K Krithivasan.
The IT major delivered a third consecutive quarter with a $10-plus billion order book, at $11.2 billion for the July-September period.
The Tata Group company posted an 8.7 per cent increase in its consolidated net profit at Rs 11,342 crore during the period, compared to Rs 10,431 crore in the corresponding period last year. The growth was driven by the UK market which grew at 10.7 per cent year-on-year.
However, the company reported a decline in dollar terms for the first time in 13 quarters.
Industry experts had widely expected the company to deliver a lower single digit growth rate amid continued global macroeconomic uncertainty. “Though meaningful, the quantum of buyback is slightly below what was widely expected,” said Nirav Karkera, who heads research at financial services provider Fisdom.
During the quarter, TCS bagged a $1 million-plus project order from Bharat Sanchar Nigam Limited to integrate and deploy a pan-India 4G and 5G mobile network. “Our target is to complete the roll out in between 12-18 months,” a company spokesperson said.
However, the firm’s overall headcount dipped by over 6,300 employees, even as attrition eased to 14.9 per cent during the period against 17.7 per cent in the previous quarter. This follows the April-June period when TCS was the only firm amongst the top-five pack to add to its workforce on a net basis.
“Our trainee hiring continues at the same pace this quarter and it will continue in the next year as well,” said Milind Lakkad, Human Resource head, adding that the campus placement process has been initiated. Furthermore, 100 per cent variable pay will be awarded to 70 per cent of the workforce, he added.
“We now have a 100,000-strong pool of Gen-AI Ready consultants and prompt-engineers who are engaged in hundreds of Gen-AI projects for our clients across segments,” said TCS COO and Executive Director N Ganapathy Subramaniam.
Elaborating on the bribes-for-jobs scandal that rocked the company during the quarter, TCS said the investigation has been concluded and appropriate action will be taken.
“Looking forward, the company has indicated a healthy pipeline of innovation projects which, if converted efficiently and effectively, will offer business a meaningful cushion against cyclical headwinds,” said Karkera. TCS' result seems to have set the tone for this quarter's IT results indicating a soft performance with reassuring guidance, he added.