BENGALURU: After a subdued first quarter(Q1, FY21), India's largest IT services company, Tata Consultancy Services has announced salary hikes for its 4,53,540 employees with effect from October 2020 across all bands.
The salary increments according to TCS CEO Rajesh Gopinathan will have an impact on the company's margins in the next quarter but is likely to be offset by demand recovery from the client side.
The Mumbai-headquartered IT services giant has hired 9,864 employees in Q2, FY21 and this included 7,000 freshers recruited virtually. The announcement came at a time when the IT industry has witnessed a slew of lay-offs over the past few months due to the disruption caused by COVID.
In the wake of increased demand for business transformation and tech adoption, TCS said that it has upskilled more than 352,000 employees in advanced technologies and 427,000 in agile methods. The IT behemoth also reported a healthy deal pipeline of $8. 6 billion in this quarter comprising of a mix of large- and small-size deals on the back of increased tech consumption.
In line with its capital return policy, Gopinathan said that the company’s Board has approved a proposal to buy back up to 5,33,33,333 equity shares of TCS, amounting to 1.42% of the total paid-up equity share capital, at Rs 3,000 per equity share for an aggregate amount not exceeding Rs 16,000 crore (excluding taxes and related expenses).
In addition, TCS has also announced an interim dividend of Rs 12 per share.
Meanwhile, the net profit of the IT services provider declined by 7% YoY to Rs 7,475 crore even as the revenues for Q2, FY21 was reported at Rs Rs 40,135 crore registering a 3% increase YoY from Rs 38,977 crore. The operating margin stood at 26.2% for the quarter. Based on strong constant currency revenue growth and profitability, the cash flow of the company stood at Rs 10,618 crore.
"What we are witnessing right now is the start of the first phase of a multi-year technology transformation cycle. In the current phase, enterprises are building a cloud-based foundation that will serve as a resilient, secure and scalable digital core. In subsequent phases, we will see the native capabilities of these platforms being utilized to create innovative new business models and differentiated customer experiences. Our investments in building deep expertise on these platforms, in research and innovation and in industry-specific solutions leveraging our contextual knowledge, position us very strongly to benefit fully from this secular demand driver," Gopinathan said.
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