Tata Consultancy Services Ltd has posted a 36.3 per cent increase in consolidated net profit at Rs 1,202.93 crore (Rs 12.029 billion) for the first quarter ended June 30, 2007, as against Rs 882.66 crore (Rs 8.826 billion) in Q1 FY07.
According to the release issued by the company, its total income for the quarter stood at Rs 5,203 crore, up 25.2 per cent as against Rs 4,225.62 crore (Rs 42.246 billion) in Q1 FY07.
The board of directors of the company has meanwhile declared an interim dividend of 300 per cent, that is, Rs 3 per equity share of Re 1 each.
TCS CEO S. Ramadorai said: "This quarter has validated the strength of our business model and our ability to respond to the external financial environment and drive growth under challenging circumstances. Despite factoring in wage hikes and an appreciating rupee, we have maintained profitability by great execution, demand creation and strong financial management."
He added: "Our focus on delivery excellence continues to provide the experience of certainty to our customers."
TCS continued to drive its pro-active program of long-term financial management with a strong focus on countering the impact of the appreciating Indian rupee against the US dollar and other major currencies.
As at the end of Q1, TCS had about $2.5 billion outstanding in hedges. The increase in the wage bill in Q1 has been largely neutralized through an enterprise-wide productivity improvement program and putting in measures to control costs.
S Mahalingam, chief financial officer, TCS, said: "Although our margins were impacted by the drastic rupee appreciation as well as planned wage increases during Q1, we have been successful in mitigating these factors through productivity increases, cost management as well as hedging gains. This has helped sustain margins at the net level despite a challenging external environment."
He added: "Compared to a year ago, the margin position coming into this financial year remains stronger and we will continue to manage this aspect of our business throughout the year".
In dollar terms, TCS revenues grew by 8% during Q1 driven by volume increases with an upward pricing bias, with banking, financial services, telecom and life sciences verticals performing strongly. Among service lines, Assurance services and asset leveraged solutions continue to grow faster than the average company growth rate.
"Our focus on key accounts continues to yield positive results with significant movement of clients to higher revenue bands. TCS now has 6 customers with annual billings of over $100m," said N. Chandrasekaran, head, global sales and operations.
"In terms of customer demand, we continue to see strong demand in the banking, financial services, telecom and retail sectors for our full services play including consulting, BPO and infrastructure services.
"Our brand-building campaign based around the concept of certainty in IT services continues to increase awareness of our brand worldwide and position us as a leading IT service provider globally, helping us gain mindshare from our customers and potential employees," said Phiroz Vandrevala, head, global corporate affairs.
Recruitment
"Our recruitment engine continues to fire on all cylinders. To ensure a steady flow of recruits, we have hired larger number of experienced professionals in Q1, which is traditionally a slow period for inducting freshers," said S. Padmanabhan, global head of human resources.
"TCS continues to have the lowest attrition rate at just 11.5% in the industry. Our ability to nurture talent, upgrade skill levels and match employee aspirations helps our retention rates and delivers certainty to our customers and employees.
TCS' attrition rate in Q1 was 11.5% overall with 11% attrition rate in the IT services business and 16.7% attrition rate in BPO. At the end of Q1, the total employee strength of the company was 94,902, from 67 nationalities. Foreign nationals formed 9.4% of the total employee base and 27% were women.
There was a gross addition of 8,706 employees of which 2,898 were trainees and 4,795 were experienced professionals in India and 1,013 employees in overseas subsidiaries and branches in Q1. The net addition was 5,512 employees.
Big Wins
- Provide a comprehensive range of telecom services to enable complete transformation of existing systems and processes to the next generation convergent billing system in a $100 million deal for a leading Asian teleco.
- Engaged by a North American airline company as a strategic partner for providing IT, BPO and Infrastructure services in full services win worth $30 million.
- Provide BPO services in the areas of biostatistics, drug safety, clinical programming and clinical data management, for a European pharma major with global operations in a $20 million deal.
- Chosen by a large US-based utility company as its strategic partner for IT services.
- Provide application development and support services for a leading North American Financial Services company
- Providing ADM and Infrastructure services in a $25 M deal for a large UK-based airline
- A large Retail Bank in the UK has engaged TCS for its strategic initiative to enhance customer experience.
- Creating a common platform to bring efficiencies in its global operations for an Europe-based insurance company.
