Continuing demand for outsourcing services and a good uptake in enterprise solutions saw Tata Consultancy Services (TCS) report an 18 per cent growth in net profit at Rs.2,803 crore for the third quarter of 2011-12 against Rs.2,370 crore in the same quarter in the previous year.
Its revenues rose by 36.6 per cent to Rs.13,204 crore (Rs.9,663 crore) with growth being broad-based across all markets and verticals.
TCS CEO and Managing Director N. Chandrasekaran, said, “Our customer-centric approach and execution rigor on the ground enabled TCS to post a strong financial performance in the quarter.''
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TCS' operating profit rose 42.3 per cent to Rs.3,859 crore (Rs 2,711 crore) while operating margin grew 218 basis points at 29.2 per cent. S. Mahalingam, CFO, TCS, said, the company was focussed on managing its operations optimally in the face of increasing external volatility. “We have increased our operating margins significantly by taking the benefits of growth, exchange movements and by keeping a strong focus on cost management.''
TCS' earnings were hit by foreign exchange losses to the extent of Rs.300.81 crore. “The level of currency and market volatility has only risen in the past three months and we are adapting our strategies accordingly,'' said Mr. Mahalingam. “It is not our business to take a call but we have to manage it and ensure that our requirements are protected.''
Despite uncertainty surrounding the eurozone debt crisis, TCS' growth was led by Europe which grew 18.1 per cent sequentially, followed by the U.S. (13.3 per cent), and the U.K. (9.5 per cent), while in emerging markets, Latin America (18.6 per cent) was followed by Asia-Pacific (15.7 per cent) and India (14.8 per cent). TCS added 40 new clients and signed ten large deals.
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TCS CEO said, “it is difficult to say the impact of rating downgrades or the eurozone crisis but on the ground, we are winning deals. We would not raise alarms and would watch the situation as it unfolds.'' In terms of personnel, total strength was 2.27 lakh with a gross addition of 18,907 employees and a net addition of 11,981 employees. Utilisation was at 82.02 per cent (excluding trainees) and 74.04 per cent, including trainees, while attrition fell to 12.8 per cent.
On deal prospects, Mr. Chandrasekaran said, “pricing will remain stable in a narrow band. We are chasing as many clients as before but need to watch out for deeper due diligence clients may take in discretionary spends which will delay decision making and ramp-ups and impact our volumes although we are not seeing any cancellations.''