The Mumbai-headquartered company earns more than 80% of its revenues from Western markets and the results reflect tough global conditions for the industry in what is usually a strong reporting quarter.
TCS, India’s second-most valuable company by market cap, reported a net profit of Rs 11,070 crore ($1.35 billion) in the three months to June 30.
The quarterly result was up 16.8% year-on-year but down 2.79% from the March quarter, still above analyst expectations on the back of a robust order book.
“We had a good quarter given current market uncertainties,” chief executive K. Krithivasan told a media briefing, adding that TCS expected some near-term softness in demand.
“Some of the programmes which are not very business-critical or the ROI (return on investment) is not very high, those programmes are getting paused or delayed, or sometimes they run on a lower capacity,” he said.
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Inflation and interest rate rises have led clients to cut back on discretionary spending. Even so, the company reported an order book of $10.2 billion for the April-June period, marginally above $10 billion in the March quarter and $7.8 billion in the final three months of 2022.
TCS was boosted by 16.1% growth in its UK market, while North America and Europe grew by 4.6% and 3.4% respectively, Krithivasan said.
Revenue from operations was Rs 59,380 crore ($7.2 billion), a 12.6% on-year increase.
Employee attrition, a key metric for software companies, declined to 17.8% from 20.9% in the first three months of the year.
TCS said it was building capabilities in newer technologies such as generative artificial intelligence, where systems such as ChatGPT and Dall-E produce text, images and other media.
The board approved an interim dividend of Rs 9 per share.
Alongside other software companies, TCS has reaped the benefits of a technology boom that positioned India as the world’s back office for subcontracted work.
The Covid-19 pandemic was also a boon for the sector amid growing demand for digital services.
TCS shares closed 0.36% lower in Mumbai on Wednesday ahead of the earnings announcement.
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