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<ul><li>Tata Consultancy Services or <keyword id="6357150" type="General" weightage="20" keywordseo="tcs" source="Orion">TCS</keyword> posted a 5% growth in net profits in the first quarter of FY23 at ₹9,478 crore.</li><li>On a quarter on quarter comparison, its profits fell by 5% as it was hit by increased costs across streams.</li><li>TCS’ CEO Rajesh Gopinathan too said that it started the new fiscal year on a ‘strong note’ and a good deal wins.</li></ul>Tata Consultancy Services or TCS posted a 5% growth in net profits in the first quarter of FY23 at ₹9,478 crore as compared to the same period last year, which was at ₹9,008 crore. 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 on to the company’s books and took the sheen off 16% revenue growth on a year-on-year comparison. The company however insists that their long-term cost structures and competitiveness remain unchanged. <div type="image" title="TCS profits grows at 5%, hit by salary hikes, talent churn and travel costs" msid="92751815" hostid="261" sizebytes="95427"></div> <cmsannotation type="cmsannotation" annotationid="Don’t see an immediate footprint of recession" comment="subhead" text="Don’t see an immediate footprint of recession">Don’t see an immediate footprint of recession</cmsannotation> TCS’ CEO Rajesh Gopinathan too said that it started the new fiscal year on a ‘strong note’ and a good deal wins. Its total order book stood at $8.2 billion. “Pipeline velocity and deal closures continue to be strong, but we remain vigilant given the macro-level uncertainties. Looking ahead, we remain confident in the resilience of technology spending and the secular tailwinds driving our growth,” said Gopinathan. When asked about the possibility of recession and its impact on the company, Gopinath said that the top management is having serious discussions on recession. “We do not see an immediate footprint of it in the near term,” he said at the press conference. TCS also declared an interim dividend in the quarter. “We would like to inform you that at the board meeting held today (on Friday), the directors have declared an interim dividend of ₹8 per equity share of ₹1 each of the company," the company said in the BSE filing. <cmsannotation type="cmsannotation" annotationid="Table: TCS’ first quarter of FY23 in numbers" comment="subhead" text="Table: TCS’ first quarter of FY23 in numbers">Table: TCS’ first quarter of FY23 in numbers</cmsannotation> <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 1pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">Particulars </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 1pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">Q1 FY23 </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 1pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">Q4 FY22 </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 1pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">Q1 FY22 </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 1pt;vertical-align:bottom;background-color:#d9d9d9;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">Revenue </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 1pt;vertical-align:bottom;background-color:#d9d9d9;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">₹52,758 crore </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 1pt;vertical-align:bottom;background-color:#d9d9d9;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">₹50,591 crore </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 1pt;vertical-align:bottom;background-color:#d9d9d9;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">₹45,411 crore </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">Net profit </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">₹9,478 crore </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">₹9,926 crore </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">₹9,008 crore </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">Margin </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">18% </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">19.6% </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">19.8% </td></tr></tbody></table>Source: Company reports Wage hikes, currency volatility and a potential slowdown in international markets like US and Europe could impact the results of the Tata Group subsidiary, a report by Emkay had predicted. Increasing visa and travel costs, along with supply chain pressures, could affect the operating margins. In spite of pricing in these events, TCS’s profits missed analyst expectations of many brokerages like Motilal Oswal, Emkay Global, Edelweiss and Prabhudas Lilladher. TCS shares fell by nearly 15% in value ever since the start of this year, and they closed at ₹3,264 on July 8. The company’s share price declined 13% in April-June 2022, performing better than the Nifty IT index’s 23.14% drop in the same period. SEE ALSO <a class="tout-title-link" href="https://www.businessinsider.in/retail/news/dmarts-growth-momentum-could-be-impacted-by-high-inflation/articleshow/92747965.cms">DMart has more stores and no disruptions like it wanted – and investors are excited</a> <a href="https://www.businessinsider.in/india/news/not-just-crude-gold-silver-and-even-wheat-and-edible-oil-prices-are-going-down-in-india/articleshow/92748130.cms">It’s not just crude, gold, silver and even wheat and edible oil prices are going down</a> <a href="https://www.businessinsider.in/business/corporates/news/spicejet-shares-plunge-sharply-due-to-several-technical-malfunctions-and-rising-jet-fuel-prices/articleshow/92742788.cms">SpiceJet: In the eye of a perfect storm</a>

TCS profits grows at 5%, hit by salary hikes, talent churn and travel costs

<ul><li>Indian IT services giant <keyword id="6357150" type="General" weightage="100" keywordseo="tcs" source="Orion">TCS</keyword> reported a subdued first quarter of FY23, with its profit missing analyst estimates.</li><li>The company also reported an increase in attrition rates and a slowdown in hiring, reflective of a challenging business environment.</li><li>It revealed that its headcount is now over 6 lakh, despite 1 in 5 employees quitting in the June quarter.</li></ul>India’s largest tech company TCS today saw the full impact of resignations, churn and the resultant salary hikes for the quarter — all of which shaved off its profit margins by 150 basis points. Even in this high cost regime, the company chose to add employees - with net additions touching 14,136 over the last quarter. And, it also crossed a milestone of 6 lakh employees – and its total headcount is now at 6,06,331. That means it added 155 new employees every day. <table style="border-width: initial; border-style: none;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 1pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">Quarter </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 1pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">Attrition rate </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 1pt;vertical-align:bottom;background-color:#d9d9d9;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">Q1 FY22 </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 1pt;vertical-align:bottom;background-color:#d9d9d9;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">8.6% </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">Q2 FY22 </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">11.9% </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;background-color:#d9d9d9;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">Q3 FY22 </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;background-color:#d9d9d9;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">15.3% </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">Q4 FY22 </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">17.4% </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;background-color:#d9d9d9;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">Q1 FY23 </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;background-color:#d9d9d9;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">19.7% </td></tr></tbody><tbody></tbody><tbody></tbody></table> Source: Company reports Last quarter, it added over 35,000 employees. This is also a reflection of the number of people who have been quitting, as its attrition rate hit the highest at 19.7% — that’s more than double of what it was in the same quarter last year. TCS admits that it’s a grave problem, but it will continue to ‘spend’ money to acquire talent. “We are making these investments to capture demand,” said Rajesh Gopinath, the CEO of TCS, at the earnings press conference. <cmsannotation type="cmsannotation" annotationid="Salary hikes in 5-8% range but top performers got better hikes" comment="subhead" text="Salary hikes in 5-8% range but top performers got better hikes">Salary hikes in 5-8% range but top performers got better hikes</cmsannotation> The company said its employees received salary hikes ranging between 5-8%, while top performers got even bigger hikes — without divulging details. Overall, TCS has set a target of hiring 40,000 freshers this year. This went down from the 1 lakh target it had set last year. However, the company said it is on track to achieve its FY23 fresher hiring target. TCS said that its workforce is diverse, comprising 153 nationalities and with women making up 35.5% of the base. It also claims to invest in organic talent development. “In the first quarter, TCSers clocked 12 million learning hours, resulting in the acquisition of 1.7 million competencies,” the company said in a press release. It also accelerated its ‘return to office’ programme in Q1, with about 20% of the workforce now working from the office. Tata Consultancy Services or TCS posted a 5% growth in net profits in the first quarter of FY23 at ₹9,478 crore; but its net profits fell by 5% on a quarterly basis – as it was hit by increased costs most of which was employee benefits. Its travel costs too ate into the profits even as its revenues grew by 16% on a yearly basis. 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TCS crosses the 6 lakh employee milestone even as 1 in 5 quit in the first quarter

<ul><li>India’s largest software exporter posted a revenue growth of 2.9% growth in revenue to $6.3 billion in the September quarter.</li><li>That was less than 3.8% growth, which was the consensus estimate on the street.</li><li>The market ignored the strength in the US dollar, which hit a 2-year high early on Monday.</li><li>For an exporter like <keyword id="6357150" type="General" weightage="20" keywordseo="tcs" source="Orion">TCS</keyword>, which earns in dollars, a rise in the value of the American currency results in higher profit in rupee terms.</li><li>Check out the latest news and updates on <a href="https://www.businessinsider.in/">Business Insider</a>.</li></ul>Revenue for India’s largest software exporter Tata Consultancy Services (TCS) grew 2.9% to $6.3 billion in the September quarter, when compared to the preceding three months. That was less than 3.8%, which was the consensus estimate on the street. Even the net margin at 25.6% was less than what the market had hoped for. The stock fell to near ₹3,670 in early morning trade on October 11, wiping out the gains since mid-August. The disappointment was so strong that the market ignored the strength in the US Dollar, which hit a 2-year high early on Monday. <div type="image" title="TCS stock chart" height="900" width="1200" msid="86929363" hostid="261"></div> For an exporter like TCS, which earns in dollars, a rise in the value of the American currency results in higher profit in rupee terms. “We believe demand for core transformation remains strong, and this coupled with exemplary execution is likely to drive strong earnings,” said Edelweiss in its report post earnings and the broking firm kept the rating at ‘buy’ and the target price at ₹5,000 in the next one year. Analysts at Motilal Oswal who cut the share price target by 4% to ₹3770 ⁠— not very far where the stock is right now ⁠— are a bit more circumspect. “The management has indicated that margin in the near term can be soft, led by ongoing supply-side challenges,” said their report. <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Broking firm </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Target price for TCS </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Edelweiss </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹5,000 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Motilal Oswal </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹3,774 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Goldman Sachs </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹4,657 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">UBS </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹3,936 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">CLSA </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹4,050 </td></tr></tbody><tbody></tbody><tbody></tbody></table>Source: Analyst reports and media reports TCS hired 43,000 freshers in the first half of 2021 and <a href="https://www.businessinsider.in/business/corporates/news/tcs-will-hire-35000-freshers-in-the-next-six-months/articleshow/86871159.cms">expects to hire another 35,000</a> in the next six months. That’s almost twice the hiring target the tech bellwether set for itself at the start of the financial year in April. The churn in the information technology (IT) industry has reportedly cooled off, but in the case of TCS, attrition, increased to 11.9% in July-September quarter from 8.60% in April-June period. This is the highest churn at TCS in at least six quarters. <div type="image" title="TCS attrition" height="900" width="1200" msid="86929922" hostid="261"></div> “We believe this attrition level will continue for the next 2-3 quarters. Having said that, our strong employer brand and our robust talent acquisition and talent development models will help us significantly overcome the supply side issues…We will continue to hire more and more and keep the supply ready since our model is robust. The attrition level is definitely concerning, but we can manage through that,” Milind Lakkad, global head of human resources at TCS, told the media after the earnings announcement on Friday. These are the growth rates of the different industry verticals that TCS provides technology services to: <div type="image" title="TCS vertical chart" height="900" width="1200" msid="86930176" hostid="261"></div> SEE ALSO: <a href="https://www.businessinsider.in/finance/banks/news/opinion-rbi-sticks-to-its-stated-trajectory-but-stands-ready-to-act/articleshow/86908652.cms">OPINION: RBI sticks to its stated trajectory but stands ready to act</a> <a href="https://www.businessinsider.in/advertising/brands/news/koo-is-spending-2-6-lakh-a-day-on-facebook-to-beat-twitter/articleshow/86868706.cms">Koo is spending ₹2.6 lakh a day on Facebook to beat Twitter</a> <a href="https://www.businessinsider.in/stock-market/news/aditya-birla-sun-life-amc-ipo-list-at-2-premium-only/articleshow/86929156.cms">Shares of Aditya Birla Sun Life AMC sees a tepid listing, opens at 2% premium</a>

TCS shares plunge more than 6% despite a stronger dollar that’s good for future profits

TCS mints almost ₹10,000 crore profit in just three months than in 12 months a decade ago

<ul><li>TCS announced that its employee attrition rate continued to rise during the January-March quarter as well, reaching 17.4%.</li><li>However, the company’s management said that the attrition rate is cooling off and may come down after a few quarters.</li><li>The IT major has hired over 1 lakh employees in FY22, taking the total count to almost 6 lakh people.</li></ul>The rate of employees leaving information technology (IT) firms continues to remain high as opportunities across the sector are growing with high digital acceptance across industries. However, the rise in attrition rate pushes such companies to hire more employees at competitive salaries, which eventually impacts their incomes. Today, Tata Consultancy Services (TCS) announced that its employee attrition rate continued to rise during the January-March quarter reaching 17.4%. <div type="image" title="tcs attrition" height="900" width="1200" msid="90783459" hostid="261"></div>However, the company’s management said that the attrition rate is cooling off and may come down after a few quarters. “The reported attrition number of 17.4% will get worse for the next couple of quarters just because of the way LTM attrition is calculated. But what we are seeing is that on a month on month basis, we are starting to see flattening of it. So in absolute terms our attrition still went up this quarter compared to last quarter, but in percentage terms it has actually started to flatten and we think that the trend will continue into next quarter. So will [sic] have to wait and see, early days yet, but the curve is definitely flattening,” said Rajesh Gopinathan, chief executive officer (CEO) at TCS in a press conference for Q4 earnings release. The employee benefits expenses, which usually includes health insurance benefits, transport facilities, work from home policy and education assistance for retaining and hiring an employee grew by ₹15,740 crore in FY22 compared to the previous financial year. This shows a big hit on the firm’s expenses. The issue is not limited to TCS, but each IT firm in the industry as companies are hiring more employees with good hikes, promotions to mitigate those leaving the firm. On a brighter side, the IT major has hired over 1.03 lakh employees in FY22 with an army of almost 6 lakh people. TCS added 35,209 employees in the last three months. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/electric-two-wheeler-sales-surge-over-5-times-in-2021-22/articleshow/90775731.cms">Electric two-wheeler sales surge over 5 times – Hero Electric, Okinawa corner half the market, Ather’s market share declines</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/adani-power-and-tata-power-in-a-race-to-cross-1-lakh-crore-market-value/articleshow/90776914.cms">Adani Power and Tata Power in a race to cross ₹1 lakh crore market value</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/startups/news/koo-founder-invites-elon-musk-after-he-turns-down-twitter-board-seat/articleshow/90780040.cms">Koo cofounder urges Elon Musk to work with Twitter’s rival in India</a>

TCS CEO expects more employees to leave the firm in the coming months, but he is not worried about it — Here is why

<ul><li>Tata Consultancy Services (<keyword id="6357150" type="ORGANIZATION" weightage="20" keywordseo="tcs">TCS</keyword>) announced its Q2 earnings for the current financial year.</li><li>TCS reported a profit of ₹8,042 crore and revenue of ₹ 38,172 crore. </li><li>It also added 14,097 employees to its roster — the highest ever number of employees onboarded in a quarter.</li></ul> Tata Consultancy Services (TCS) shares fell by 3.65% as the share market opened today trading at ₹1931.20. Stock brokerages have cut estimates on the stock performance of TCS after a muted performance in the second quarter. Morgan Stanley has trimmed their estimates by 1- 3.5% with a target of ₹1980 per share. Phillips Capital also downgraded their estimates but expect that growth will pick up during the next financial year as strong deal momentum, lower attrition and strong cash flow kick in. Tata Consultancy Services (TCS)’s net profit for the second quarter stood at ₹8,042 crore which is a percent lower than last quarter’s ₹8,131 crore. 
 
 
 
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 Its revenue grew by 2% to ₹38,977 crore, as compared to ₹38,172 crore in the last quarter. “We ended the quarter with steady growth despite increased volatility in the financial services and retail verticals,” said Rajesh Gopinathan, CEO and MD of TCS. TCS brought 14,097 employees onboard this quarter — the highest ever number of employees added in a quarter. It plans to add another 30,000 freshers to its ranks before the current financial year ends. 
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 It’s also paying out ₹45 per share, which includes ₹40 as special dividend.. On a yearly basis, the IT giant's revenue grew by 5.8% led by a boom in its digital vertical, which grew by 27.9%. In fact, digital revenue is one-third of TCS' total revenue this quarter. Other verticals that have contributed significantly to TCS' revenue include life science and healthcare, which grew at a yearly growth rate of 13.3% and communications and media, which grew by 11.8%. Incremental weakness is coming in for TCS from retail, both in the US and in Europe. There is no change in the trend of Banking and Financial Services (BFSI), indicating that its continued to stay weak. The combination of global trend continue to remain a challenge for TCS. TCS’ pre-tax profits came in at ₹9,361 crore with profit margins at 24% — slightly lower, by 0.2%, as compared to the last quarter. See also: <a href="https://www.businessinsider.in/careers/news/tcs-plans-to-add-30000-freshers-to-its-ranks-to-reshape-its-cost-structure/articleshow/71524019.cms" style="">TCS plans to add 30,000 freshers to its ranks to reshape its cost structure</a>

TCS earnings growth gets squeezed by slowing economies across the world

<ul><li>Earnings season will begin next week with the results of major IT companies -- TCS on April 11 and Infosys on April 13.</li><li>Digital transformation deals continue to boost IT sector’s growth along with rupee depreciation in the recent months benefiting the sector.</li><li>However, profit margins of these companies are expected to be under pressure because of increase in employee salaries and record hiring.</li></ul>The March quarter earnings season will begin next week with the results of major information technology (IT) companies such as Tata Consultancy Services (TCS) on April 11 and Infosys on April 13. Most analysts believe March is a seasonally weak quarter for IT companies and they expect moderate earnings growth amid margin pressures. The profit margins of IT companies are expected to be under pressure because of increase in employee salaries and record hiring. “Sequential growth for Indian IT will be moderate in March 2022 quarter and in line with historical seasonal trends. Margins will remain under pressure resulting from elevated wage increases, onsite as well as offshore,” said Kotak Institutional Equities. The entire IT sector is struggling to retain employees including top five companies. In fact, in the last quarter <a href="https://www.businessinsider.in/tech/enterprise/news/more-employees-are-leaving-tech-mahindra-than-tcs-and-wipro/articleshow/89291721.cms">more employees left Tech Mahindra </a>than at TCS and Wipro. The report added that talent shortage continues even as the industry has added a record number of freshers. High cost to backfill attrition and retain talent will seep into margins across companies. <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Top IT companies </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Expected revenue growth in Jan-Mar* </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">TCS </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2.7% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Infosys </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2.2% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Wipro </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">3.6% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">HCL Tech </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">1.2% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Tech Mahindra </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">5.2% </td></tr></tbody></table>Source: Emkay Research*Revenue growth in constant currency on a sequential basis Meanwhile, the growth momentum may sustain due to healthy broad-based demand as firms across the world have increased spending on new technologies. “The demand environment is robust at present. There could be moderate risk to demand as fallout of the Russia-Ukraine imbroglio starts impacting key economies. Nonetheless, we believe double-digit growth is feasible for many,” said a report by Kotak Institutional Equities. Higher employee cost and shortage of skilled talent will remain the key challenges in the short term for IT companies. Investors will keenly monitor the management commentary on any impact on technology spending from higher energy prices, inflation and potential economic slowdown, demand trends in key verticals such as banking, financial services and insurance (BFSI), retail, manufacturing and communications, and the attrition rates. <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Top IT companies </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Results date </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">TCS </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">April 11 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Infosys </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">April 13 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Wipro </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">April 29 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">HCL Technologies </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">April 21 </td></tr></tbody></table> SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/startups/news/unacademy-reportedly-lays-off-1000-employees-from-sales-business-and-other-functions/articleshow/90709336.cms">Unacademy reportedly lays off 1000 employees from sales, business and other functions</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/startups/news/bharatpe-ceo-takes-a-jibe-at-ashneer-grover-says-no-money-left-to-pay-salaries-since-grover-stole-it-all/articleshow/90706030.cms">BharatPe CEO takes a jibe at Ashneer Grover, says no money left to pay salaries since Grover stole it all</a>

Profit margins of IT companies must be under pressure for January-March quarter due to record hiring and salary hikes

<ul><li>Tata Consultancy Services (TCS) will add 18,000 freshers in the next three months </li><li>Its profits too grew by 10.8% to ₹8,131 crore as compared to Rs 7,340 crore in the first quarter last year. </li><li>TCS has trained over 315,000 employees in new digital technologies. </li></ul>The country’s largest company by value, Tata Consultancy Services (TCS) will add 18,000 freshers in the next three months, according to a press release. This is after they added 12,356 employees during the first quarter of the year, which is the highest ever addition in the last five years. They had given out 30,000 joining letters to freshers and 40% of them have come onboard already. This hiring plan comes on the back of strong growth in revenues at 10% in the first quarter ending June 2019. Its profits too grew by 10.8% to ₹8,131 crore as compared to ₹7,340 crore in the first quarter last year. The company also said that its attrition is at 11.5%. “TCS account teams are better placed to retain the contextual knowledge gained over time, and use that to build differentiated solutions tailored to each customer’s unique requirements,” said Milind Lakkad, Global Head, Human Resources in a press release. Digital Transformations TCS also said that more of its customers are undertaking digital transformation projects, swelling its orderbook. “We have had a steady start to the new fiscal year. We see customers continuing to spend on their growth and transformation initiatives, and that is showing in our strong order book and deal pipeline this quarter,” said Rajesh Gopinathan, Chief Executive Officer and Managing Director of TCS. During the quarter, the company gained two large financial sector clients during the quarter. “We are confident of the future as we embrace deeply the Machine First philosophy in delivering experiential and modern solutions to our clients,” said N Ganapathy Subramaniam, Chief Operating Officer &amp; Executive Director. To be able to deliver these services, TCS has also trained over 315,000 employees in new digital technologies.

TCS to add 18,000 freshers in the next three months

TCS June 2022 results – 10 things to know about the IT giant’s latest earnings

<ul><li>TCS is expected to show a quarterly growth rate of 2.8%, according to analysts. </li><li>The company’s operating margins are expected to expand by 50 basis points (bps). </li><li>The macro environment has been challenging but it should be offset by the rupee depreciation, sustained wages and absence of visa costs. </li></ul>Tata Consultancy Services (TCS) will be the first of the Indian IT companies to declare its quarterly earnings this season. This quarter, its double digit growth is expected to be under pressure. Macro slowdown could present challenges for emerging IT demand but analysts from India Infoline (IFFL) Institutional Equities expect it some it to be offset by the recent depreciation of the Rupee. It also helps that visa costs have not increased further, and wages are sustained at current levels. Analysts forecast a 2.8% quarterly growth rate for the company and operating margins to expand by 50 basis points or 0.5%. "Sustenance of healthy growth in communications vertical and recovery in the retail vertical as well as progress on its platform strategy, where TCS is gaining traction in verticals like BFS and life sciences, apart from insurance are key comments to watch," cites IFFL’s report. The BFS sector is particular is of interest to investors as TCS in the midst of implementing large projects in this space. Its order bookings and commentary from clients will help analysts determine its revenue inflow from such deals. A lot will also depend on the spending outlook of large US banks. In the last quarter, TCS reported outsourcing contracts worth $5.7 billion. It was the fourth quarter in a row where it bagged deals worth $5 billion and more.

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