Tata Consultancy Services (TCS), the country's largest software company, on Monday announced a 30 per cent jump in its consolidated net profit at Rs.2,369.83 crore for the third quarter ended December, 2010, against Rs.1,824 crore in the corresponding quarter in the previous year, driven by strong demand for outsourcing services and volumes.
The board of the company also announced an interim dividend of Rs.2 on an equity share of Re.1 each.
The company's income from operations rose by 26.3 per cent to Rs.9,663.35 crore during the quarter (Rs.7,648.53 crore) and it added 35 new clients during the quarter.
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The company's operating profit at Rs.2,707 crore was up 29 per cent and the operating profit margin was at 28 per cent, up 54 basis points over the year-ago figure.
According to TCS CEO and Managing Director N. Chandrasekaran, “sharp focus on our strategy with rigorous execution discipline has helped us capture volumes, defend our margins and deliver another stellar quarter. Demand environment continues to be strong and we are focused on helping our customers become more efficient and plan for growth. With clients' focused on transforming their businesses and become globally competitive in this dynamic macro environment, we are optimistic that demand for our solutions will continue to be strong going forward.''
TCS Chief Financial Officer S. Mahalingam said, “our ongoing outperformance has been the result of a sustained effort from all operating teams to focus on growth with profitability. As we grow in size, we will have more levers to combat headwinds and maintain our profitability while continuing to grow. We continue to live with currency volatility and have leveraged our cost management ability to deliver on margins.''
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Growth has been led by the developed markets such as the U.S. and Europe with strong contributions from Asia Pacific and the Middle East and Africa. The portfolio of industries has shown strong growth.
In terms of services, TCS' full services capabilities continue to be leveraged by customers with the new service lines such as assurance and infrastructure services growing fast.
He added that pricing growth was 1.18 per cent and total business volume growth was at 5.7 per cent. “All markets grew except India and Latin America where higher discretionary spend did not grow during the quarter.'' During the quarter, the company was granted three patents and at the end of the quarter, TCS has applied for 413 patents and has been granted 67. Offshore revenues were up 3 per cent at 51.4 per cent while revenues from non-Indian GNDM centres were at 4.9 per cent.
TCS' utilisation remained at 83.8 per cent (excluding trainees) and 77.1 per cent (including trainees). The attrition rate for IT services was 13.2 per cent and BPO at 24.7 per cent with the overall attrition at 14.4 per cent. At the end of the third quarter, the total employee strength was at 186,914. “We have hired the highest ever number of new TCSers in a single quarter with a gross addition of 20,219 employees as we continued to support the company's strong growth and business pipeline,'' said Ajoy Mukherjee, VP, Head, Global Human Resources, TCS. “Given the strength of business demand, we have exceeded the hiring target we had set for this fiscal year and are looking at a further addition of 12,000-15,000 in the fourth quarter.''
For the nine month period, TCS reported a 29 per cent jump in net profit at Rs.6,445 crore and 22 per cent higher revenues of Rs.27,167 crore. The operating profit was up 29 per cent at Rs.7,540 crore while the operating margin was up 150 basis points at 27.8 per cent.