Tata Consultancy Services reported a 1.3% improvement in revenue in constant currency terms, which is less than the 1.7% improvement reported in the previous quarter, but largely in line with expectations for a tame quarter. Revenue grew 6.2% on year in constant currency terms.
In rupee terms, the company’s revenue was at 30,904 crore; up 3.9% Y-o-Y and 1.2% Q-o-Q — also largely in line with expectations. Last quarter, revenue had risen at 3.2% (quarter on quarter).
In dollar terms, revenue was at $4,787 million; up 9.1% Y-o-Y and; 1.0% Q-o-Q. Last quarter, revenue in dollar terms had risen 3.2%.
Volume growth was 1.6% quarter on quarter, indicating that there was pricing pressure given that the constant currency revenue growth was only 1.3%.
The company said volume growth was the strongest for this quarter in three years.
Q3 FY18 Net Profit was at Rs.6,531 crore; up 1.3% Q-o-Q, and largely in line with expectations.
EBIT improved to 8,645 cr from Rs 8,472 cr in the preceding quarter, but was down from 8,918 cr in the year-ago period.
In Oct-Dec, operating margin improved to 25.2%. Last quarter, TCS had reported an improvement in operating margin by 170 basis points sequentially to 25.1%.
Most industry verticals grew above company average in the quarter.
The Retail and consumer products vertical showed a strong turn around, growing 6.4% on quarter.
Growth was led by Energy & Utilities (+8.5%), Travel & Hospitality (+2.9%) and Life Sciences & Healthcare (+2.5%).
On a year on year basis, all industry verticals – with the exception of BFS and Retail – grew above 9.5%, with four verticals growing in double digits, it said. Segment growth numbers are in constant currency and not in real terms.
In terms of geography, growth was led by Latin America (+5% on quarter), Continental Europe (+2.6%) and North America (+1.5%).
On a Y-o-Y basis, Continental Europe (+22.3%), UK (+8.2%) and India (+4.1%) performed well.
North America grew 2.8% YoY.
The company added 1,600 to its headcount.
TCS is, by far, India’s largest private sector employer and has around 3.9 lakh employees, out of which over 3 lakh are in India.
The company has extensive campuses in Mumbai, Bangalore, Hyderabad, Chennai and Trivandrum.
It is part of the Tata Group, India’s largest business conglomerate, and is the most profitable of the Group’s firms.
TCS Limited was founded in 1968. Among its first contracts were to deliver punched card services to sister company TISCO, an Inter-Branch Reconciliation System for the Central Bank of India, and bureau services to Unit Trust of India.
The company is in the middle of a transformation, moving from business that focuses on tapping cheap technical labor in India to serve global clients to one that develops complicated software that can be used by companies to automate manufacturing and service jobs, such as customer service.
It is believed that companies like TCS will have to slim down to a fraction of their current headcount to survive in the new world of IT services.