Tata Consultancy Services (TCS), India’s largest software services provider, continued to grow during the quarter ended March, reflecting the improvement in the global economy.
Growth drivers for the company included increased deal momentum in Europe, the UK and Asia-Pacific.
For the quarter, TCS reported better-than-expected profit, owing to higher other income. However, revenue growth was low due to slow growth in regions such as India and Latin America.
Net profit rose 51.5 per cent year-on-year to Rs 5,358 crore (Rs 53.58 billion), against Rs 3,497 crore (Rs 34.97 billion). Sequentially, profit rose 0.5 per cent (Indian GAAP). Revenue increased 31.2 per cent to Rs 21,551 crore (Rs 215.51 billion) annually and 1.2 per cent sequentially.
“Overall, there was nothing particularly exciting one way or the other as far as the fourth quarter results were concerned. While TCS does not give a formal guidance (forecast), the management maintains a positive outlook for FY15 and expects revenue growth in FY15 to exceed that in FY14,” said Anantha Narayan and Sagar Rastogi of Credit Suisse.
In dollar terms, the company clocked growth of 16.2 per cent in revenue at $13.4 billion, while net income increased 22.9 per cent to $3.1 billion. Revenue growth was ahead of Nasscom’s FY14 growth target of 12-14 per cent.
“We are upbeat that the next 12 months will bring many more opportunities for growth across multiple industries and markets. As an organisation, we remain focused on disciplined execution of our strategy.
I think FY15 will be better than FY14,” said N Chandrasekaran, chief executive and managing director. He added in FY15, growth would primarily be driven in the first half of the year.
Though the fourth quarter is usually slow for the sector, TCS reported robust volume growth of 2.59 per cent. For the third quarter, it had reported volume growth of 2.9 per cent.
For FY14, the company reported net profit of Rs 19,117 crore, up 37.5 per cent, while revenue rose 29.9 per cent to Rs 81,809 crore. For the March quarter, as well as for the entire financial year, the company’s operating margin was 29.1 per cent. The company has said it would maintain this at 26-28 per cent.
“Our focus has been to stay disciplined in operations, while supporting business growth across markets, industries and technologies. We enhanced our profitability to industry-leading levels, despite the macro- and currency volatility through the year. We are continually investing to stay ahead of the curve,” said Rajesh Gopinathan, chief financial officer.
The company said it foresaw an increase in digital segment deals. “Our strategic investments, including those in digital technologies, are providing a compelling value proposition and helping us anticipate and shape new market trends successfully,” said Chandrasekaran.
Though the company saw overall growth, Latin American operations contracted 2.3 per cent sequentially. At 0.3 per cent, growth in Indian operations was flat for the March quarter. The company expects India operations will continue to grow slowly in the next three-four months. TCS continued to see pressure in verticals such as retail (-0.7 per cent), telecom (-2.4 per cent) and manufacturing (-0.8 per cent).
The company said in the quarter, it added nine large deals.
During FY14, the number of TCS’s $100-million clients rose to 24 from 17 in 2012-13.
During the quarter, the company net-added 9,751 employees, raising its overall headcount for 2013-14 to 300,464. Of these 7,572 trainees and 7,401 laterals were recruited in India, while 3,591 employees were hired abroad. During the March quarter, the company saw 11.3 per cent attrition.
“We trained and integrated 61,200 professionals, who joined TCS during 2013-14. With business demand continuing to be robust, we have made almost 25,000 fresh offers on engineering campuses for trainees who will join us from the second quarter of the new financial year,” said Ajoy Mukherjee, executive vice-president, head (global human resources).
High utilization rates have been maintained in the fourth quarter with utilization excluding trainees at 83.8 per cent, while utilization including trainees was at 77.9 per cent. The overall attrition rate was at 11.3 per cent with IT attrition at a low of 10.40 per cent and BPS attrition below 15 per cent threshold to 14.90 per cent on a LTM basis.
TCS to hire 55,000 in FY15
Tata Consultancy Services (TCS) announced on Wednesday it would hire 55,000 employees for FY15. “We had announced similar numbers last year but depending on the business environment, we have added employees,” said N Chandrasekaran, chief executive and managing director. Of these, the company has already given offer letters to 25,000 freshers. The rest would be recruited through lateral hiring.
Asia-Pacific deals grew 2.4 per cent
Europe grew 7.6 per cent
Discretionary spending picking up
Salary hike of 10 per cent in India; 2-4 per cent in developed markets; 4-6 per cent in developing markets
Operating margin at 29.1 per cent
Latin America operations shrank 2.3 per cent
India flat at 0.3 per cent
Retail, telecom and manufacturing verticals slow