IT services major Tata Consultancy Services (TCS) on Wednesday posted its fiscal second quarter profit at Rs 11,380 crore, up 8.7 per cent in comparison to Rs 10,465 crore during the same period last year, surpassing estimates. It posted revenue from operations at Rs 59,692 crore, up 7.9 per cent as against Rs 55,309 crore during the second quarter of FY23. According to a poll by CNBC TV18, TCS was expected to post Q2FY24 revenue at Rs 60,160 crore and the quarter profit at Rs 11,162 crore.
The company also announced the second interim dividend of Rs 9 per equity share of Re 1 each of the company. “The second interim dividend shall be paid on Tuesday, November 7, 2023, to the equity shareholders of the Company, whose names appear on the Register of Members of the Company or in the records of the Depositories as beneficial owners of the shares as on Thursday, October 19, 2023, which is the Record Date fixed for the purpose,” it said in a regulatory filing.
K Krithivasan, Chief Executive Officer and Managing Director, said, “Our clients continue to entrust us with critical new technology initiatives, and large programs to digitally transform their IT and business operating models. Strong deal momentum delivered us a very large order book in Q2 – our second highest TCV ever in a quarter, and a good pipeline. The resilience of demand for our services, our clients’ willingness to commit to long tenure programs and their continued appetite for experimentation with Gen AI and other new technologies give us confidence in our longer-term growth prospects.”
N Ganapathy Subramaniam, Chief Operating Officer and Executive Director, said, “During the quarter, BSNL awarded us the project to integrate and deploy a modern, indigenous pan-India 4G and 5G mobile network. This is a huge milestone for TCS, and we have commenced the supply, planning, design, installation and commissioning, and optimization of this mobile network, satisfying a detailed set of requirements conforming to 3GPP standards and the roll-out will be completed in about 18 months.”
TCS posted operating margin for the quarter ended September 2023 at 24.3 per cent, up 0.3 per cent on-year. The net cash from operations was at Rs 11,823 crore, that is, 104.2 per cent of net income.
TCS’ revenue across segments
TCS posted Q2 revenue from its banking, financial services and insurance business at Rs 22,840 crore. Its manufacturing business posted quarter revenue at Rs 5,787 crore, the consumer business revenue was at Rs 9,773 crore, while the communication, media and technology business vertical posted Q2 revenue at Rs 9.572 crore. Meanwhile, its life sciences and healthcare vertical recorded the quarter revenue at Rs 6,625 crore.
Growth drivers at TCS
The performance, it said, was driven by strong deal momentum with the order book at $11.2 billion. It said that the book to bill ratio was 1.6. The IT services company said that growth was led by the UK (+10.7 per cent YoY), Energy, Resources and Utilities (+14.8 per cent) and Manufacturing (+5.8 per cent).
In terms of segments, Energy, Resources and Utilities vertical grew 14.8 per cent, Manufacturing grew 5.8 per cent and Life Sciences and Healthcare grew 5 per cent. The Consumer Business Group (CBG) grew 1 per cent, BFSI grew -0.5 per cent, Communications & Media grew -2.1 per cent and Technology & Services grew -2.2 per cent.
Further in terms of markets, the United Kingdom led with 10.7 per cent growth; North America grew 0.1 per cent and Continental Europe grew 1.3 per cent. In emerging markets, Middle East and Africa grew 15.9 per cent, Latin America grew 13.1 per cent, Asia Pacific grew 4.1 per cent and India grew 3.9 per cent.
As on September 30, 2023, the company has applied for 7,665 patents, including 218 applied during the quarter, and has been granted 3,153 patents including 149 granted in Q2.
TCS’ workforce
With gross additions held below departures, TCS’ workforce, it said, stood at 608,985 as on September 30th, reflecting the company’s “focus on improving workforce utilization and productivity”. The employee base continues to be very diverse, with 35.8 per cent women and 152 nationalities. “Year till date, TCSers have clocked 26.4 million learning hours, and acquired 2.6 million competencies including 350,000 high demand competences. IT services’ attrition was at 14.9 per cent for the last twelve months,” the company said.
N Ganapathy Subramaniam said, “We continue to make investments in our people and new technologies. 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.”
Milind Lakkad, Chief HR Officer, said, “Our strategy of proactively hiring bright freshers and investing in training them with the right skills is paying off. With that talent coming on stream and with reduced attrition, we were able to recalibrate our gross additions, keeping it below the departures during the quarter, driving up productivity and enhancing project outcomes.”