TCS Q3 net zooms 11% to Rs10,846 crore

- After 6 qtrs of uptick, attrition fell to 21.3% from 21.5% in Q3

- Annualised attrition fell 6%

- Onboards 42,000 freshers this fiscal so far

- Operating margin improved by 50bps to 24.5%

Bengaluru: IT services major Tata Consultancy Services (TCS) reported a strong set of performance for the third quarter of FY23 with sound revenue growth along with improved operating margin and falling attrition amid recessionary fears in the US and Europe.

TCS reported a 10.98 increase in its consolidated net profit at Rs10,883 crore for the quarter ended December 2022 (Q3FY23) as compared to Rs9,806 crore in the year-ago period.

Revenue from operations was at Rs58,229 crore, up 19.11 percent against Rs48,885 crore in the corresponding quarter of the previous fiscal. In constant currency term, revenue rose 13.5 percent over the same period last year.

"We are pleased with our strong growth in a seasonally weak quarter, driven by cloud services, market share gains through vendor consolidation, and continued momentum in North America and UK," said Rajesh Gopinathan, Chief Executive Officer and Managing Director, TCS.

Despite slowdown fears, TCS said that both the US and UK continued to remain strong, while demand environment in the Europe remained difficult to call out.

"Both the US and UK market continued to be strong though we are aware of the volatility in the UK market. Europe is very difficult to say but we will be able to navigate it better than other players given our strong presence," Gopinathan said.

In deal pipeline term, TCS bagged deals worth $7.5 billion in the quarter, which was slightly lower than the last two quarters. "We remain optimistic about the deal momentum. These comprise both cost takeout and innovative deals and are well-balanced. We have nothing to call out at this point of time," said N Ganapathy Subramaniam, COO, TCS.

In the third quarter, operating margin of the Mumbai-headquartered firm improved 50 basis points over the last quarter to 24.5 per cent. The company remains confident of attaining 25 per cent operating margin band by the end of FY23.

In terms of industries, banks, financial services, and insurance (BFSI), which make up a major part of TCS' revenue, saw 11 per cent growth in the December quarter.

The company witnessed a fall in its employee attrition number marginally to 21.3 per cent on LTM basis during the December quarter.

"On quarterly annualised basis, attrition came down 6 per cent in December quarter. We have already onboarded 42,000 freshers this year so far. We may add a few thousands more," said Milind Lakkad, chief HR officer of TCS.

Headcount of TCS declined by 2,197 to 613,974 by the end of the December quarter, which is the first reduction in headcount in ten quarters. The company said it is likely to hire same number of freshers in the next financial year.

We're are pleased with our strong growth in a seasonally weak quarter, driven by cloud services, market share gains through vendor consolidation, and continued momentum in North America and UK

-- Rajesh Gopinathan, CEO & MD, TCS