India's Tata Consultancy Services Posts Decline in Profit

TCS CEO Rajesh Gopinathan

TCS CEO Rajesh Gopinathan

The country's largest IT services company reported a 3.64 per cent drop in net profit at Rs 6,531 crore compared with Rs 6,778 crore in the year-ago period. We signed our first $50mn+ deal in Digital this quarter, crossing an important milestone in the mainstreaming of Digital technologies.

BFSI revenue dipped 0.4 percent as the company reported a 3.6 percent fall in net profit to 65.31 billion rupees ($1.03 billion) in the quarter to December 31.

"TCS will provide valuable administration and quality customer service, and Transamerica will continue to engage with our customers, clients and advisors in the most meaningful ways to them by utilizing our digital engagement platforms and developing new solutions that help people save, protect, invest and retire", Transamerica said. Growth was led by Energy & Utilities (+8.5% Q-o-Q), Travel & Hospitality (+2.9% Q-o-Q) and Life Sciences & Healthcare (+2.5% Q-o-Q).

Digital revenue, which formed 22.1 per cent of total revenue for the quarter, was up 39.6 per cent year-on-year and up 13.9 per cent quarter-on-quarter.

Marks & Spencer will spend £25m to implement a new technology programme and outsource 250 jobs as it pushes ahead with plans to become a "digital-first" retailer.

Margins were also steady at 25.2 per cent, while volume growth (increase in man hours billed) rose 1.6 per cent on a sequential basis. The company has seen "lagging parts of portfolio turn around and areas of softness reduce".

The agreement, a multi-year partnership with more than Dollars 2 billion of revenues to TCS, is expected to be completed by the second quarter 2018.

The company saw a 0.2 per cent decline in its attrition rate at 11 per cent and added about 1,600 employees during the quarter.

The American company said it expects to save $70 million initially, growing to $100 million overtime, from the contract, indicating the deal should generate several hundred million dollars in revenue for TCS every year. Sanjoy Sen, doctoral research scholar, Aston Business School, U.K. said TCS' results were neither spectacular nor disastrous. "TCS is proud to partner with Transamerica in its ongoing transformation to enhance its customer experience, and looks forward to welcoming their current employees for new careers at TCS".

Apart from this, TCS also informed that, the directors have declared a third interim dividen of Rs 7 per equity share of Rs 1 each of the company, and which shall be paid to the shareholders of the company whose names appear on the Register of Member.