TCS registers broad-based growth in second quarter
India's largest technology-services exporter Tata Consultancy Services (TCS) reported net profit of $1.3 billion in the quarter ended September 2021, which was 28 percent higher than a year ago, and 6.6 percent over the previous quarter.
It clocked revenue of $6.3 billion in the quarter, 16.8 percent over a year ago and 2.9 percent higher sequentially.
TCS registered broad-based growth across all segments. The revenue growth in the second quarter was led by manufacturing, which grew 22.7 percent.
The banking, financial services and insurance (BFSI) sector, which accounts for around 32 percent of its revenue and is TCS’s largest segment, crossed $2 billion, growing 17 percent over a year ago. Life sciences and healthcare, as well as retail and consumer packaged goods verticals, grew by more than 17 percent.
North America, which accounts for around 50 percent of TCS’ revenue, grew 17 percent to $3.19 billion.
TCS also added five more clients in the $100-million revenue band, taking the number to 54.
Driven by improving vaccination levels and business outlook, the company said there is huge demand from businesses for digital transformation services like cloud, enterprise application services, analytics and IoT.
Rajesh Gopinathan, CEO and Managing Director of TCS, said the strong and sustained demand environment is a "once-in-a-decade opportunity".
TCS' board of directors approved his reappointment as MD and CEO for the next five years. It also reappointed N Ganapathy Subramaniam as Chief Operating Officer and Executive Director until May 2024.
"We are using the growth tailwind to invest in strengthening relevant capabilities, and building out a comprehensive portfolio of offerings that caters to a broader set of stakeholders in the enterprise across business cycles," Gopinathan said.
The operating margin during the quarter was 25.6 percent, growing 10 basis points over the last quarter "in spite of supply side challenges as well as currency headwinds during the quarter," said Samir Seksaria, Chief Financial Officer. “Any short term volatility on the supply side could have short-term impacts.”
The attrition rates across the IT industry has been rising for the past few quarters. TCS’ attrition rate for the last twelve months stood at 11.9 percent, which is the lowest in the industry. “We believe this attrition level will continue for the next two or three quarters,” said Milind Lakkad, Chief HR Officer. TCS will onboard 35,000 freshers in the second half of the year, he added.
“Investing ahead of time in building our own pipeline of talent has helped us overcome supply-side challenges, and meet the execution timelines of our customers’ growth and transformation programmes,” he added.
The IT services firm will hire 78,000 hires in the year, and has hired more than 43,000 freshers since the beginning of the financial year, the company said.
It added a net 19,690 employees in the second quarter. TCS employs 528,748 people.