BENGALURU: IT major Tata Consultancy Services (TCS) on Monday reported a 14% year-on-year decline in consolidated net profit for the December quarter, mainly due to exceptional costs related to labour law changes, legal provisions and restructuring expenses.
The company posted a net profit of Rs 10,657 crore, compared to Rs 12,380 crore in the same period last year.
Revenue from operations for the October–December quarter came in at Rs 67,087 crore, a 5% rise from Rs 63,973 crore a year earlier. On a quarter-on-quarter basis, profit declined 12% from Rs 12,075 crore in the September quarter, while revenue increased 2% from Rs 65,799 crore.
During the quarter, TCS reported exceptional items worth Rs 2,128 crore. This included Rs 1,816 crore for additional gratuity costs and Rs 312 crore for long-term compensated absences after India’s new labour codes came into effect on November 21.
The company also set aside Rs 1,010 crore for a legal claim filed by Computer Sciences Corporation in the United States, which has accused TCS of misappropriating trade secrets.
In addition, TCS incurred restructuring costs of Rs 253 crore in the quarter. The company said termination benefits were paid in line with its policy. The restructuring charge was 77% lower than the Rs 1,135 crore recorded in the previous quarter.
In the December quarter, the total headcount dropped by 11,151 to 582,163 and voluntary attrition in IT services rose by 20 basis points to 13.5%.
Sudeep Kunnumal, chief human resources officer, said in the post-earnings call with analysts: “We continue to hire from campuses and laterally, while restructuring remains ongoing. About 1,800 employees were released during the year in line with policy and laws. The exercise will continue into the next quarter.”
Meanwhile, even with the fall in profit, operating performance stayed steady. Operating margin was 25.2% for the quarter, unchanged from the previous quarter.
Deal activity remained stable, with total contract value at $9.3 billion for the quarter, compared to $10 billion in the previous quarter. Annualised AI services revenue increased to $1.8 billion, marking a 17.3% sequential growth in constant currency terms.
On a constant-currency basis, regional performance was mixed. North America recorded a marginal 0.1% sequential growth, while continental Europe grew 2.1%. The UK saw a decline of 1.9% during the quarter. Among emerging markets, India grew 8%, the Middle East and Africa rose 3.2%, and Asia-Pacific increased 1.1%.
TCS also announced an interim dividend of Rs 57 per equity share for FY26. This includes a third interim dividend of Rs 11 per share and a special dividend of Rs 46 per share.