India’s largest IT services company TCS reported an 11% rise in December-quarter net profit to 108.46 billion rupees, constrained by narrowing margins, but sounded optimistic about its deal plans.
Over the years, the company has reported a slight decline in its workforce base, which had long been growing steadily, but made it clear that this was not due to the demand environment and said it would hire as many as 1.50 employees. One hundred thousand next fiscal year.
The Tata group board also declared a dividend of Rs 75 per share, including a special dividend of Rs 67 per share, which will result in a cash outflow of Rs 33,000 crore.
Its total revenue rose 19.1% to Rs 5,822.9 crore in the reported quarter, but a 0.5% drop in operating margin to 24.5% limited overall profit growth.
Its chief executive and managing director Rajesh Gopinathan told reporters it was more confident in its North American and UK businesses, which account for two-thirds of its revenue, but there were short-term uncertainties, while Europe needed closer monitoring due to geopolitical tensions. The virus has limited customers’ IT spending.
COO N Ganapathy Subramaniam said deal momentum and pipelines looked good, and even in this environment, the overall picture for technology spending appeared to be intact.
In terms of new deals, the company reported a total contract value of $7.9 billion for the quarter, which Gopinathan said was in the mid-range of its $7-9 billion target.
Mr. Gopinathan attributed the quarter’s revenue growth to customers’ cloud spending, and made clear that his customers would not be affected by the general trend of companies revisiting hyperscalers.
He also said the company gained market share through supplier consolidation, but declined to quantify the same market share or share details of the competing companies it left behind to win business.
CFO Samir Seksaria said third-party costs and increased costs due to normal operations impacted margins, adding that it will end FY23 with an operating margin of 25%, which is in line with the level seen at the end of FY22.
He said the company has the leverage it needs to expand its margin range, including mitigating supply-side challenges that have led to higher spending to hire or retain staff over the past few quarters, and deal pricing.
Its total headcount fell by 2,197 to 613,000, its first quarterly decline in years. Its chief human resources officer, Milind Lakkad, said the decline was due to the total number of people leaving the company being higher than the number of new hires at campuses and branches.
It has already hired 42,000 new grads in the first three quarters of this fiscal and may hire a few thousand more in the final quarter, he said, adding that it will continue the trend of hiring 40,000 grads in FY24, while Mr Gopinathan indicated that 125,000-150,000 people will be employed in FY24 as well.
Mr Lakkad said the decline in overall staffing was due to investments made in FY22 through increased recruitment and had nothing to do with the demand environment at all. It should be seen as a case of staff being used more effectively, he said.
The seasonal holidays that typically dominate the third quarter had some impact on the business, but were also in line with expectations, Subramaniam said, adding that the Asia-Pacific business contributed the most.
Overall, banking, financial services and insurance, the company’s largest vertical, is growing well and the company doesn’t have much concern about the sector, although the insurance sector is showing some weakness, Subramaniam said, adding that the $2.5 billion TCV comes from the industry.
Indian banks are piloting metaverse solutions but we are far from implementing any solutions on the client side, the COO said, adding that the shift to cloud, analytics and data mining and integration with services offered by startups dominate Lenders working locally with technology.
Analysts at Gartner said: “TCS has demonstrated flexibility in tailoring delivery to clients’ desired business outcomes and demonstrated a commitment to driving value for money. This has helped it drive relatively better performance in terms of financial performance. industry benchmark,” the research firm said. The company’s shares closed up 3.35 percent at Rs 3,319.70 apiece on the BSE on Monday, while the benchmark index rose 1.41 percent.
(This story was not edited by NDTV staff and was automatically generated from syndicated feeds.)
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