CHENNAI: With Natarajan Chandrasekaran taking over as Tata Sons chairman on February 21, his stint as head of Tata Consultancy Services (TCS) is set to end on a high note.
TCS, India’s largest software services firm by revenues, has beaten market estimates by posting a 10.9 per cent year-on-year jump in profits to Rs 6,778 crore for the October-December 2016 quarter — up from Rs 6,110 crore in the year-ago period. The sequential growth was 2.9 per cent.
This is a notable achievement for the Chandrasekaran-led firm given the fact that the IT sector as a whole has been going through challenging times.
The sector remained one of the worst performers in 2016 bogged down by a fall in demand due to automation as well as the protectionist stance of US President-elect Donald Trump, who reportedly wants to cut down on outsourcing by US companies, and currency volatility, among other factors.
Despite this, TCS added two clients in $50 million revenue category and five clients under the $10 million category.
On TCS’ impressive third quarter results, Chandrasekaran said: “The resilience of our business model and strength of our operating strategy has been brought to the fore by our performance in Q3, traditionally a quarter of weak demand.”
He added that TCS’ strengths in digital platforms and cloud, and the deep knowledge of customers’ domain were driving the firm’s ability to play a strategic role and make a holistic impact on the business.
The company’s operating profit was at Rs 7,733 crore in the reported quarter. Revenue was up 8.7 per cent at Rs 29,735 crore from Rs 27,364 crore a year ago. On a quarter-on-quarter basis, net profit was up 2.9 per cent, while revenue grew 1.5 per cent.
To support and sustain the company’s digital business that is growing at 30 per cent on an annual basis, TCS continues to build new capabilities in digital technologies, empower employees to enhance agility in the workplace and invest more to develop IP-based platforms and products, he added.
“Alongside a good growth performance, we have been able to keep profitability stable in our desired range and deliver over USD 1 billion in free cash flow during the quarter,” said Rajesh Gopinathan, chief financial officer of TCS who will take over as CEO on February 21.
Chandrasekaran exuded confidence that the sector will be able to tackle the challenges arising from any change in visa rules.
TCS is known for creating one of the largest avenues of employment in the private sector in India.
With about 3.78 lakh employees, it also has one of the highest retention rates in the industry.