IT services major Tata Consultancy Services (TCS) on July 8 said its consolidated net profit for the quarter ended June 2022 increased 5.21 percent to Rs 9,478 crore, compared 9,008 crore in the same quarter last year. Sequentially, the profit declined by 4.51 percent.
Revenue from operations during the quarter came in at Rs 52,758 crore, which was 16.17 percent higher than the year-ago quarter and 4.28 percent from the previous quarter.
In Q1FY23, the company’s net margin stood at 18%. While its operating margin dipped 2.4% YoY to 23.1% in the quarter.
Samir Seksaria, Chief Financial Officer of TCS said, “It has been a challenging quarter from a cost management perspective. Our Q1 operating margin of 23.1% reflects the impact of our annual salary increase, the elevated cost of managing the talent churn, and gradually normalizing travel expenses.
However, our longer-term cost structures and relative competitiveness remain unchanged and position us well to continue on our profitable growth trajectory.
However, on a quarter-on-quarter comparison, its profits fell by 5% as it was hit by increased costs across streams — like travel expenses in addition to employee benefit costs. The company’s profit grew by 5% compared to last year.
“It has been a challenging quarter from a cost management perspective. Our Q1 operating margin of 23.1% reflects the impact of our annual salary increase, the elevated cost of managing the talent churn,, and gradually normalizing travel expenses,” said Samir Seksaria, CFO of TCS.
These costs loaded onto the company’s books and took the sheen off 16% revenue growth on a year-on-year comparison. The company however insists that its long-term cost structures and competitiveness remain unchanged.
TCS declared an interim dividend of ₹8 per equity share having a face value of Re 1 each to its shareholders. TCS announced July 16 as the record date to identify eligible shareholders for the dividend payment. Following this, TCS has fixed August 3 as the date for paying the dividend to these shareholders.
IT services firm Tata Consultancy Services saw attrition for the Q1FY23 come in at 19.7 percent on a last twelve-month basis, which is the highest in the last six quarters. It is up from 17.4 percent in Q4FY22. TCS added 14,136 employees in the first quarter of FY23, taking its headcount to over 6 lakh. On a year-on-year basis, its net addition numbers were down from 24,000 in Q1FY22 to 14,000 in Q1FY23.
TCS had announced a hiring target of 40,000 for FY23 at the end of FY22. TCS CFO Samir Seksaria said the company is on track to hire 40,000 people this fiscal, and is not its changing hiring target. The company’s leadership said hiring is positioned to contract or expand depending on demand.
Commenting on the attrition numbers, CEO Rajesh Gopinathan said attrition in this quarter should be also considered from a seasonality perspective as junior level employees go for studies or other areas, but said that it has not yet started to dip.
Chief HR officer Milind Lakkad said in a statement the company has invested in strategic talent development initiatives and the linking of learning to career development has “energized our workforce.”