TCS Reported 11% On-Year Growth In Net Profit For Q3

For the third quarter of the fiscal year, Tata Consultancy Services (TCS) reported an 11% increase in net profit over the prior year. Analysts surveyed by a news agency had expected a 12.5% increase in profits for the TCS with its headquarters in Mumbai.

Due to a slowdown in new recruiting, the corporation also experienced its first overall employment loss in 10 quarters.

The largest software exporter in India reported that revenue was above analyst expectations and increased 19.1% year over year to 58,229 crores, driven by demand for cloud solutions.

The company declared a special dividend of ₹67  cents per equity share and an interim dividend of ₹8.

Rajesh Gopinathan, the CEO and MD of TCS, told reporters that the company does not perceive "structural problem with the US and the (slowdown) is more a transient one".

Although he cautioned that "We are quite positive about the demand there, "Europe has a problem (in terms of demand) and it is a more difficult one to call. Something needs to happen for it to turn around."

The TCS CEO predicted that "to be more balanced in terms of the nature of (overall) demand".

The company's net profit for the three months ending in October and December increased from Rs 9,769 crore to Rs 10,846 crore. Profit increased by 3.9% and revenue by 5.2% sequentially.

The company's quarterly sales of $7 billion was reached in dollar terms.

According to analysts, IT services won't be immune to worsening global macroeconomic trends like growing prices, a slowing economy, currency challenges, and maybe less investment in technology.

According to Sanjeev Hota, head of research at Sharekhan by BNP Paribas, "Management commentary on demand environment looks hazy for the short-to-medium term owing to the uncertain global environment," 

TCS shares on the BSE closed 3.3% higher on Monday at Rs 3,319.7. Results were announced following the day's market closure.

According to company management, aggressive hiring throughout the previous fiscal year caused the overall workforce to decline by 2,197 sequentially rather than reflecting a decline in demand. TCS reported a net addition of 9,840 employees in the prior quarter.

Voluntary attrition for the quarter was 21.3%, down from 21.5% the previous quarter, and the business predicted significant improvements in the statistic in the future. The company has previously stated that the last four quarters' high cost of talent had negatively impacted profitability.

At the height of the Covid-19 pandemic, the business last recorded a decrease in staff of about 4,800 workers during the first quarter of FY21."Our posture is positive and we are not pulling people off the field. We are fully engaged and present. From a talent capacity perspective, we overinvested last year and benefited from it," Gopinathan stated.

During the quarter, the company onboarded about 7,000 freshmen, down from 20,000 during the prior quarter.

For the fiscal year 2023–2024, the corporation plans to keep recruiting 40,000 new employees.

Milind Lakkad, TCS's chief human resources officer, said during the company's post-earnings call that the decision to hire a sizable number of new employees both last year and in the first half of this year was paying off.