Too early to say whether growth momentum is sustainable: TCS CEO

Tata Consultancy Services (TCS) managing director and CEO K Krithivasan believes it is too early to say whether growth momentum is sustainable because market conditions continue to remain the same as they were in the last quarter.

“The reason we are hesitant to call this growth sustainable is because we do find market conditions volatile. Customers take decisions at a very short notice based on what they perceive of the market conditions,” Krithivasan says in a press conference after India's largest software services exporter announced earnings for the quarter ended June.

Krithivasan, however, believes the ongoing financial year will be better than FY24.

TCS onboarded around 11,000 trainees in the June quarter. The IT giant expects to hire close to 40,000 trainees this year.

In the first quarter, net employee addition compared to Q4 FY24 was at 5,452. Global employee headcount at end of Q1 stood at 606,998. Attrition moderated to 21.1%, 40 basis points down from 12.5% in the last quarter. TCS expects attrition to stabilise at this level.

TCS reported a consolidated net profit of ₹12,040 crore for the June quarter compared with ₹11,074 crore in the same period last year. Revenue from operations rose 5.4% year-on-year to ₹62,613 crore in the first quarter.

Revenue contribution from BFSI (banking, financial services and insurance), the key driver of its business. BFSI contributed 30.9% to TCS’ revenue growth in Q1 FY25 compared with 32.5% in Q1 FY24.

Also, revenue contribution from North America dipped to 49.5% during the June quarter compared with 52% in Q1 FY24

“BFSI and North America are intertwined because we have a great exposure in North America. As BFSI starts seeing growth, North America will grow,” says Krithivasan. TCS also expects regional geographies including India to contribute more. One of TCS’ biggest clients in India is BSNL.

During the quarter, TCS reported a total contract value of $8.3 billion, which was down 18.6% year-on-year and 37.1% sequentially. In Q4 FY24, TCS’ order book stood at $13.2 billion.

“In spite of the usual impact of the annual wage increments in this quarter, we have delivered strong operating margin performance, validating our efforts towards operational excellence. We remain focused on making the right investments in R&I and talent, strengthening our superior return ratios and creating long term value for our stakeholders,” says Samir Seksaria, chief financial officer, TCS.

The board of the country’s most valued IT company also declared an interim dividend of ₹10 per equity share