Leading IT services giant TCS announced a notable 9% increase in its net profit to Rs 12,434 crore during the January-March quarter of FY24, primarily driven by robust domestic operations. Despite encountering challenges in its key overseas markets, the company managed to maintain a steady growth trajectory.
Throughout the fiscal year, TCS witnessed a commendable 9% surge in net profit, amounting to Rs 45,908 crore, with revenue climbing from Rs 2,25,458 crore to Rs 2,40,893 crore compared to the previous year.
Amidst these developments, TCS reported a reduction in its overall workforce by over 13,000 employees over the past year, bringing the total count to 6,01,546.
While North America, the largest market geographically, experienced a slight dip of 2.3% in revenues, continental Europe also saw a 2% decline during the January-March period. However, the company's domestic business showcased robust performance, registering an impressive 38% growth in revenues and contributing significantly to the overall quarterly revenue of Rs 61,237 crore.
Addressing the challenges faced, TCS CEO and Managing Director K Krithivasan acknowledged the uncertainties impacting growth in North America, particularly in the banking, financial services, and insurance sector. Despite this, Krithivasan expressed optimism about a turnaround, anticipating a better performance in FY25 compared to FY24.
Chief Operating Officer N G Subramanian attributed the revenue impact to reduced discretionary spends by clients, although spending on non-discretionary items remained stable. Delays in the execution of signed deals due to macroeconomic uncertainties were also highlighted as factors affecting revenue accretion for the quarter.
Looking ahead, Krithivasan emphasized the potential of regional and emerging markets to outperform major ones in the upcoming fiscal year, despite their current smaller contribution to the overall revenue.
Regarding TCS's domestic business, which saw a significant boost from the Rs 15,000-crore deal with state-run BSNL, revenues surged by 38%, elevating India's contribution to the overall revenue pie to 6.7%.
Furthermore, TCS reported its highest-ever quarterly new orders of USD 13.2 billion, with a significant portion comprising lower-value and short-term deals, aligning with prevailing market conditions.
The company's operating profit margin expanded by 1.50% to reach 26%, falling within the aspirational band of 26-28%. This improvement was attributed to various factors, including better utilization, disciplined execution, and reduced subcontractor costs.
Looking ahead, TCS plans to hire 40,000 freshers in the new fiscal year and implement a pay hike of 4.5-7% for all employees, aiming to further reduce attrition rates.
Despite challenges, TCS remains optimistic about future growth opportunities, with a focus on emerging technologies such as AI. The company aims to capitalize on its extensive experience and expertise to navigate evolving market dynamics successfully.
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