Tata Consultancy Services (TCS), India’s premier IT services company, recently unveiled its financial results for the quarter ending December 31, 2023, showcasing a resilient performance despite industry challenges. The company reported a net profit of Rs 11,058 crore, a 2% increase from the corresponding quarter in the previous year. However, the net profit experienced a marginal 2.5% decline on a sequential quarterly basis.
In the face of hurdles such as furloughs in the Banking, Financial Services, and Insurance (BFSI) sectors and a slowdown in discretionary spending, TCS demonstrated its adaptability. The consolidated revenue for the quarter exhibited a robust 4% YoY growth, reaching Rs 60,583 crore. Notably, the EBIT margin expanded to 25%, surpassing the previous quarter’s 24.3% and exceeding expectations.
TCS Unveils Resilient Q3 FY24 Financials
TCS’s board approved a dividend of Rs 27 per share, incorporating a special dividend of Rs 18 for the financial year 2023-2024. This underscores the company’s commitment to providing value to its shareholders amid the dynamic economic landscape.
Commenting on the results, K Krithivasan, Chief Executive Officer and Managing Director, highlighted the strength of TCS’s business model, characterized by a diversified portfolio and a customer-centric strategy. He noted, “Our strong performance in a seasonally weak quarter buffeted by macro-economic headwinds demonstrates the strength of our business model with a well-diversified portfolio and a customer-centric strategy.”
Despite the challenges, TCS reported a solid order book, reflecting a robust deal momentum across markets. Krithivasan emphasized the company’s leadership in the innovative field of Generative AI, citing significant interest and exploratory efforts for customers in this area.
However, the total contract value (TCV) for deals amounted to $8.1 billion, a decline from $11.2 billion in the previous quarter and falling below TCS’s quarterly guidance range of $9-10 billion. This downward trend suggests evolving market dynamics impacting deal values and structures.
N Ganapathy Subramaniam, Chief Operating Officer and Executive Director, highlighted the company’s progress in national projects and the noteworthy performance of TCS’s products and platforms. He mentioned the scaling success of the MCX platform and the ongoing BSNL 4G/5G network rollout, illustrating TCS’s execution strength.
Shifting focus to workforce dynamics, TCS witnessed a second consecutive quarter of headcount decline, with a net reduction of 5,680 employees in Q3. Despite this reduction, the total employee base as of December 31 remained substantial at 603,305. The attrition rate further decreased to 13.3%, down from 14.9% in Q2.
Milind Lakkad, Chief HR Officer, provided insights into the evolving work environment, stating, “The vibrancy and energy levels in our offices are increasing as more and more of our employees are back in the offices.” TCS had transitioned from its hybrid model to a five-day work-from-office schedule. Lakkad expressed optimism about returning to the normal operating mode by the end of the fiscal year.
Lakkad also highlighted TCS’s commitment to campus hiring, with plans to add 40,000 freshers in FY24. The excitement among freshers to join TCS is evident, reflecting the company’s efforts to attract and nurture young talent. TCS has commenced the campus hiring process, showcasing its dedication to growing talent organically.
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In a broader context, Lakkad emphasized TCS’s strategic investment in fresh talent for nearly 18 months, and the positive outcomes are now apparent. The company is not rushing to backfill attrition immediately, signaling a thoughtful and measured approach.
TCS’s Q3 FY24 results underscore its ability to navigate challenges, maintain financial growth, and adapt to evolving workforce dynamics. The decline in headcount is coupled with a strategic focus on campus hiring and a steadfast commitment to nurturing organic talent. TCS remains optimistic about its long-term growth prospects, driven by a well-diversified portfolio and a customer-centric approach in a dynamic business environment. As the company continues its journey, these results reaffirm TCS’s position as a stalwart in the IT services industry.
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