Story of two markets for TCS, says CEO
THE devastating coronavirus wave that hit India this year ate into the earnings of the country’s biggest software exporter Tata Consultancy Services (TCS), the company said last Thursday (8).
The IT giant reported a net profit of `90.08 billion (£869 million) in the quarter that ended June 30, an increase of 28 per cent on the same quarter last year, when figures were also affected by the pandemic.
On a quarterly basis, however, the profit of India’s second most valuable company by market capitalisation declined by 2.6 per cent, despite a strong performance in North America and Europe.
“It’s a story of two markets,” CEO Rajesh Gopinathan said.
“We have the core markets, which are growing very strongly, and we have primarily the Indian market that has been significantly impacted, degrowing at minus 14 per cent.”
India suffered a brutal Covid wave in April and May that caused tens of thousands of deaths and closed many businesses.
Wage hikes also affected what is usually a strong quarter for India’s IT sector, resulting in TCS’s operating margins shrinking by 1.3 per cent quarter on quarter, to 25.5 per cent.
Revenues jumped 18.5 per cent year on year, to `45.41bn, TCS said, but against the previous quarter rose only 3.9 per cent.
Growth was led by North
America, Europe and Latin America, where revenues grew between 16 per cent and 20 per cent, year on year.
Chief operating officer N Ganapathy Subramaniam called it another “superior quarter” for orders.
TCS was at the forefront of an IT boom that saw India become a back office to the world, taking advantage of a skilled Englishspeaking workforce. TCS earns more than 80 per cent of its revenues from Western markets.