Tata Consultancy Services (TCS), the country’s largest software exporter, on Thursday, reported a net profit of Rs. 5,333 crore for the third quarter ended December 2013, a growth of 50 per cent over the year-ago period.
Revenue for the period grew 32.5 per cent to Rs. 21,294 crore, with operating profit up 44.6 per cent at Rs. 6,337 crore, and the operating margin rising 249 basis points to 29.8 per cent. Net profit margin rose 296 basis points during the quarter to 25 per cent while volumes rose 1.8 per cent.
“It was an excellent quarter with strong international demand for our services and discipline in execution that has helped us maintain momentum and post robust growth in volumes as well as realization,” said N. Chandrasekaran, CEO & MD, TCS, while addressing a press conference here on Thursday.
The company said growth in the third quarter was driven by industries like life science & healthcare, manufacturing, media, travel and telecom. “India business suffered from volatility and declined sequentially by 9 per cent,” Mr. Chandrasekaran said, adding that the India market would be uncertain till the June or September quarter considering the likely elections. “I expect volatility and no major growth till then.”
On TCS’ deal pipeline, he said the customer traction was good in all bands with a “very good deal flow. We won eight large deals ($50 million plus) during the quarter.”
Digital tech opportunities
TCS expects digital spends to increase across-the-board . “The digital business will run into a few billion dollars for TCS in the next 2-3 years. It will be a driver of growth, value and a big positive for us over the next few years. We foresee large scale engagements in the digital area and as they increase, there will also be opportunities for pricing upticks,” Mr. Chandrasekaran said, adding, “with digital technologies rapidly changing the way an enterprise operates in multiple dimensions, our continuous investments positions us well to help customers re-imagine their business. The addressable market for us will increase year-on-year and we are well positioned to partner clients in the digital space.”
Raising hiring target
During the quarter, there was a total gross addition of 14,662 people (net 5,463 employees), taking employee strength to 2,90,713. The utilization rate (excluding trainees) was at 84.3 per cent (including trainees at 77.5 per cent). Attrition was stable at 10.9 per cent, with IT attrition at 10.3.
Ajoy Mukherjee, Executive VP and Global Head, Human Resources, TCS, said the company was increasing its hiring target for 2013-14 by 5,000 employees to 55,000 professionals, “to support business growth.”
“Based on initial discussions with our customers, we believe 2014 will be a much stronger year for us than 2013 and the prospects are very bright as customers execute their business plans in a relatively stable environment.” the TCS chief said.
On the Bombay Stock Exchange, the TCS stock opened at the day’s high of Rs. 2,380, fell to a low of Rs. 2,321.1 and closed trading at Rs. 2,351.35, down Rs. 2.9 (0.12 per cent).