TCS reports Rs8,701-cr Q3 net profit; revenue growth hits 9-year high

Tata Consultancy Services (TCS), India’s largest IT services provider, has reported a 7.18 per cent year-on-year increase in its net profit for fiscal third quarter ended 31 December 2020-21, at Rs8,701 crore.

TCS had reported a net profit of Rs8,118 crore in the year-ago quarter, ie, October-December 2019-20.
The company's revenue during the quarter ended 31 December 2020 rose 5.42 per cent to Rs42,015 crore from Rs39,854 crore in the corresponding period in the previous fiscal. This is also the strongest revenue growth recorded by the company in the last 9 years.
On a quarter-on-quarter basis, revenue (in constant currency terms) increased by 4.1 per cent quarter-on-quarter (QoQ) and 5.1 per cent in dollar terms.         
TCS declared a dividend of Rs6 per share for the third quarter, which, the company said, will be paid on Wednesday, 3 February 2021, to shareholders of the company. The record date has been fixed as 16 January 2021. 
“Growing demand for core transformation services and strong revenue conversion from earlier deals have driven a powerful momentum that helped us overcome seasonal headwinds and post one of our best performances in a December quarter. We are entering the new year on an optimistic note, our market position stronger than ever before, and our confidence reinforced by the continued strength in our order book and deal pipeline,” Rajesh Gopinathan, chief executive officer and managing director, said.
"The revenue impact of the pandemic played out broadly along the lines we had anticipated at the start of the quarter. It affected all verticals, with the exception of Life Sciences and Healthcare, with varying levels of impact. We believe it has bottomed out, and we should now start tracing our path to growth," he added. 
“Our Q3 growth is a very satisfactory outcome of our ability to leverage the proactive investments made to capture the strong demand and be meaningful to our clients. It is a strong endorsement of our resilience, way of working and the relative competitiveness of our products and services, N Ganapathy Subramaniam, chief operating officer and executive director, said.
“We celebrated the accomplishment of our Enterprise Agile by 2020 vision during the quarter, and with SBWS, we have a well-oiled location-independent execution model that brings in the resources just in time, efficient execution, and machine-led delivery governance that are delighting our customers. All these augur well to progress our 25x25 future of work vision,” he added.
TCS said all verticals showed good sequential growth, led by manufacturing (7.1 per cent), BFSI (2 per cent), Life Sciences and Healthcare (5.2 per cent), Communications and Media (5.5 per cent) and Retail and CPG (3.1 per cent). 
On a year-on-year, constant currency basis, Life Sciences and Healthcare continued to grow in double digits at 18.2 per cent. BFSI (2.4 per cent) and Technology and Services (2.4 per cent) also moved into positive territory, the company stated.
Regionwise, sequential growth was led by North America (3.3 per cent), India (18.1 per cent), UK (4.5 per cent), and Continental Europe (2.5 per cent). Other markets grew as well, with Asia Pacific growing 2.6 per cent, MEA 6.7 per cent, and Latin America 3.1 per cent.
TCS said its services business continued to see a strong rebound in growth and transformation services as customers sought to operationalise new models. Growth in the quarter was led by Cloud Services, Analytics and Insights, Cognitive Business Operations, IoT and Quality Engineering and Transformation Platform Services, it added.
TCS’ consolidated headcount stood at 469,261 as of 31 December 2020, with a diverse workforce comprising 147 nationalities, and women constituting 36.4 per cent of the base.
“While continuing to stay closely focused on employee engagement and morale, we are now gearing up for growth. Our sustained investment in organic talent development is now paying rich dividends, helping us support our business growth. We are also continuing along our journey to reimagine and transform the HR value chain, leveraging technology innovatively to digitize processes, virtualize interactions, and enhance responsiveness. These initiatives for entry-level hiring, training and onboarding were so successful, we are now rolling out similar models for mid-level hiring and incremental reskilling. All this has resulted in a superior employee experience, while materially driving up our throughput,” said Milind Lakkad, chief human resources officer.