Tata Consultancy Services (TCS), India’s largest IT services exporter, has announced robust financial results for the second quarter of the current fiscal year, driven by cost optimization and improved efficiency. The company also revealed a share buyback program worth Rs 17,000 crore at a buyback price of Rs 4,150 per share, planning to repurchase up to 4.09 crore shares.
During Q2 FY24, TCS reported a net profit of Rs 11,342 crore, an 8.7% increase compared to Rs 10,431 crore in the same period of FY23. The company’s revenue grew by 7.9% year-on-year for the quarter, reaching Rs 59,692 crore. However, TCS’ growth in both net profit and revenue fell slightly below analysts’ expectations.
The growth in revenue in US dollar terms remained flat on a quarter-on-quarter basis, contrary to experts’ predictions of a 0.5% growth.
TCS’s Q2 performance aligns with expectations, considering the challenges stemming from the broader macroeconomic environment. TCS CEO K Krithivasan highlighted customer uncertainty due to cash conservation, leading to subdued or moderate growth. Economic signals from TCS’s largest market, the US, are conflicting, causing customers to consider further reductions in IT spending. In this environment, TCS foresees moderate growth.
TCS reported a billing order book of $11.2 billion; however, the actual conversion to revenues remains uncertain. The company achieved a 30 basis point improvement in operating profit margins, reaching 24.3% during the second quarter, thanks to productivity enhancements, cost optimization, and reduced subcontracting costs.
A notable development in Q2 was a reduction in TCS’s headcount by 6,333. Despite this, the total employee strength at the end of the quarter was 608,985. HR head Milind Lakkad clarified that the decline in headcount is not a cause for concern, and the company continues to hire freshers and experienced professionals. TCS is investing in its people and new technologies, maintaining a pool of 100,000 GenAI-ready consultants and prompt engineers engaged in numerous Gen-AI projects for clients across various sectors, according to TCS COO N Ganapathy Subramania.
