The floods in Chennai and a slowdown in global demand weighed on the third-quarter performance of IT major TCS.
The company posted 14.2 per cent growth in net profit to ₹6,083 crore for the quarter ended December compared with ₹5,327 crore in the corresponding quarter last year.
However, sequentially, the profit is down 0.3 per cent from ₹6,085 crore in the second quarter this year.
In dollar terms it is up 6 per cent year-on-year and down by 0.1 per cent sequentially. TCS’ third-quarter revenue rose 11.7 per cent to ₹27,364 crore.
The company acknowledged that the going has been tough.
“In India, there has been a huge drop this quarter and it has not only impacted India revenue but the growth in overall company revenue. All our industry segments have exhibited growth in a traditionally weak quarter, additionally accentuated by the impact of the Chennai floods,” said N Chandrasekaran, Chief Executive and Managing Director.
He said the India business remains a concern as the company. “India has been more hit than what we would have liked. India stabilising has been my wish for a very long time,” he said adding that the share of the India business has declined to about 6 per cent. He also said that the company’s troubled UK-based Diligenta unit will continue to reflect negative growth for at least another quarter.
The company had warned over the impact on its growth and margins due to massive floods in Chennai, which houses TCS’ largest delivery centre, and has over 65,000 employees.
Last June, research firm Gartner had predicted a 5.5 per cent dip in worldwide IT spending in 2015, which is expected to impact not just TCS but even other IT services firms such as Infosys and Wipro, which are yet to announce their results.
The Chennai floods led to TCS’ employee utilisation dipping 110 basis points to 84.9 per cent (excluding trainees) and 80.9 per cent (including trainees).
With a net addition of 9,071 employees, the company now has 3,44,691 employees.
TCS said it had nine key wins in the quarter, including one $100-million-plus client and two $20-million-plus clients.
The company’s digital business grew 4 per cent sequentially, bringing up its share of revenue to 13.7 per cent. Chandrasekaran said the company is way past its initial forecast to cross $5 billion in digital revenues in the next couple of years.
“There is no doubt that the past quarter has been one of the most challenging in the recent past with volatility, uncertainty and global headwinds together with an adverse currency situation, which may not have been foreseen when the original estimates were compiled,” said Sanjoy Sen, Doctoral Research Scholar, Aston Business School, UK.