TCS reports a 12% jump in Q3 profits, but headcount falls

Bengaluru: IT services bellwether Tata Consultancy Services (TCS) reported a 12 per cent annual jump in its consolidated net profit at Rs 12,380 crore for the October-December quarter (Q3FY25), compared to Rs 11,058 crore for the same period last year, on back of a strong order book.

However, TCS, which is India’s largest tech sector employer, reported a net decline of 5,370 employees in its workforce in Q3, a reversal after two consecutive quarters of headcount growth. 

It also declared an interim dividend of Rs 10 and a special dividend of Rs 66 per share.

Revenue for Q3 stood at Rs 63, 973 crore, up 5.6 per cent on a year on year (YoY) basis, but down by 0.4 per cent compared to Q2 (July-September 2024)

The Mumbai-headquartered Tata group company posted a robust total contract value (TCV) in a seasonally weak quarter at $10.2 billion, against $8.6 billion in the second quarter of FY25.

“We are pleased with the excellent order book performance in Q3 which was well-rounded across industries, geographies and service lines lending good visibility to long-term growth. We expect calendar year 2025 to be better than 2024,” said K Krithivasan, Chief Executive Officer and Managing Director.

In terms of headcount, the company’s attrition rate stood at 13 per cent, up 0.7 per cent sequentially, but within its comfort range. However, it anticipates a reduction in attrition numbers, going ahead.

“We are on track for hiring on campus this year and we intend to hire more than 40,000 professionals in the next fiscal year (FY26),” said Milind Lakkad, Chief Human Resources Officer. 

On United States (TCS’ biggest market), which is awaiting an incoming President and is grappling with a raging debate on the H1B visas, the company expects discretionary spending by clients to likely increase in some verticals, boosting confidence for the future.

“Our dependence on H-1B visas is very limited, so I don’t think that is a major concern for us because we have a global workforce,” Lakkad said in the company’s post earnings call.

Another trend being witnessed since the previous quarter is the continued stellar run in the Indian market, boosted by TCS’ large deal with Bharat Sanchar Nigam Limited (BSNL). The management affirmed that they are bullish on domestic growth, apart from the BSNL deal.

On artificial intelligence (AI) being a threat for jobs, TCS is of the view that while there can be shifts in roles, it does not expect jobs to reduce due to generative AI.