Software services major Tata Consultancy Services (TCS) reported a 5.9% decline in net profit for the quarter ended June 30, 2017, at Rs 5,945 crore, compared with Rs 6,318 crore in the corresponding quarter last year.
However, on a sequential basis, net profit declined by 10%, compared with net profit of Rs 6,608 crore in Q4 2016-17. This is perhaps the company’s biggest drop in quarterly profits in nearly two years. Revenues for the company during the quarter remained nearly flat at Rs 29,584 crore, against Rs 29,305 crore in the same quarter last year(Q1FY17).
“During the quarter, high currency volatility, including sharp rupee appreciation against the dollar resulted in Rs 650 crore loss in reported revenues. We remain disciplined in our financial management, stay focused on generating strong cash flows and invest in our digital business.
Despite the impact of wage hikes in Q1, we continue to drive profitability to our targeted range,” TCS CFO V Ramakrishnan said. According to TCS MD and CEO Rajesh Gopinathan, the company’s performance was impacted due to a couple of factors.
“The profitability has been impacted due to seasonal and external factors. This includes a 150 basis points impact due to salary hike and 80 basis point impact due to currency fluctuation. Overall, the impact has been 230 bps on profitability,” Gopinathan said.
“We have had excellent wins across all markets and have a good deal pipeline across industries that positions us well for growth in FY18. We have retooled our organisation structures and go-to-market teams to remain relevant to customers and have introduced new service lines like Cognitive Business Operations and Digital Transformation services to capture these new opportunities,” Gopinathan added.
Strong revenue growth was visible across verticals in the June quarter. All industry verticals except retail and BFSI exhibited strong growth at over 3.5% sequentially. All major markets grew in constant currency terms with Europe leading the way (5.9% Q-o-Q), followed by North America and the UK. Among growth markets, Latin America led the pack at (2.8% Q-o-Q) followed by India, APAC and MEA.
The total employee strength at the end of Q1 was 3,85,809 on consolidated basis, with gross addition of 11,202 and net addition of (1,414 employees), during the quarter. The total attrition rate (LTM) was at 12.4% including BPS, with IT attrition at only 11.6%.
The percentage of women in TCS rose to an all-time high of 34.8%, while the number of nationalities increased to 134.
Published 13 July 2017, 19:43 IST