Tata Consultancy Services (TCS), India’s largest IT services exporter, reported an 8.7% rise in net profit for the three-month period between July and September of the current fiscal, driven largely by cost optimisation and increased efficiency.
The company also announced a Rs 17,000 crore share buyback programme with a buyback price of Rs 4,150 per share. It will buy back up to 4.09 crore shares in this programme.
The net profit during Q2 FY24 stood at Rs 11,342 crore as compared to Rs 10,431 crore earned during the comparable period of FY23.
The revenue grew by 7.9% year-on-year for the second quarter to touch Rs 59,692 crore.
However, TCS' growth in net profit and revenue was a shade below the analysts’ expectations. The revenue growth in US dollar terms on a quarter-on-quarter basis remained flat while experts were expecting a half-a percentage growth.
The company's performance for the second quarter was almost on expected lines given the challenges from the broader macro economy.
“There is uncertainty as customers are conserving cash leading to muted or moderate growth,” said TCS CEO K Krithivasan.
He further remarked that there are confusing economic signals from its largest market—the US—and this has led to its customers looking at further reducing their IT spends. For TCS, the growth scenario remains moderate.
Despite this environment, TCS said it has a billing order book of $11.2 billion, however, one cannot be sure how much will convert into actual revenues.
In addition, TCS also managed to improve its operating profit margins for the second quarter of the fiscal by 30 basis points YoY to touch 24.3% as compared to 24% in the first quarter. This was largely due to productivity improvements, cost optimisation and reducing its sub-contracting costs.
The surprise was a decline in TCS' headcount by 6,333. At the end of the second quarter, the total employee strength stood at 608,985 as compared to 615,318 in the first quarter.
HR head Milind Lakkad noted that the company had hired many people in the last two years and there was no cause for alarm with this decline in headcount. He further added that the company continues to hire freshers and experienced professionals.
“We continue to make investments in our people and new technologies. We now have a 100,000-strong pool of GenAI-ready consultants and prompt-engineers who are engaged in hundreds of Gen-AI projects for our clients across segments,” TCS COO N Ganapathy Subramania noted.
Edited by Kanishk Singh