TCS revenue rises 13.5% to over $7billion in December quarter

BENGALURU: TCS posted a revenue of a little over $7 billion in the December quarter, up 2. 2% in constant currency compared to the previous quarter. Compared to the December quarter of the previous financial year, the growth in constant currency was 13. 5%, maintaining the good double-digit growth that Indian IT has seen since the recovery from the pandemic.

The operating margin expanded 50 basis points (100bps = 1 percentage point) sequentially to 24. 5%. TCS said the revenue growth was majorly due to a 15. 4% constant currency growth year-on-year in North America and the UK. The company’s business in India grew 9. 1%.

The management said the only geography that looks weak is Europe. At a media conference following the announcement of the results, CEO & MD Rajesh Gopinathan said, “North America is different and supportive. At the start of the year, they might be cautious. But into the year, it should be fairly positive because there is no structural issue. This is subject to how inflation pans out. In the UK, the environment is challenging, but since an immediate flip is not expected, customers are committing to structural and cost transformation. ”

The company, which has for long been the margin leader in the industry, expects to end the financial year with an operating margin of 25%.

The company said it is continuing to push for better pricing given inflation. “New price points are getting factored in. We have an advantage in digital transformation and we are getting deals on new price points. Cost and optimisation deals are competitively billed,” TCS CFO Samir Seksaria said.

On the deal pipeline, the management said cloud-related investments are moving business. COO N Ganapathy Subramaniam said clients want to continue deploying cloud, and since it is not feasible for them to discontinue that deployment and later restart this journey, those investments will continue.

Meanwhile, for the first time since the pandemic-hit first quarter of FY21, TCS has witnessed a net reduction in total headcount. In the December quarter, the headcount dropped by 2,197. The total headcount at the end of the third quarter of FY23 stood at 6,13,974.